In opinion of FX Strategists at UOB Group, the recent price action in EUR/USD opens the door to further decline to 1.1160 in the next weeks.
24-hour view: “Our expectations for EUR to ‘trade sideways’ was incorrect as it plummeted to 1.1184 before closing on a weak note at 1.1197 (-0.44%). Further weakness appears likely but oversold conditions suggest that the next major support at 1.1160 is likely out of reach for today (there is a minor support at 1.1180). Resistance is at 1.1220 followed by 1.1240.”
Next 1-3 weeks: “On Monday (22 Nov, spot at 1.1285), we highlighted that further EUR weakness is likely but ‘oversold conditions suggest that 1.1200 may not come into the picture so soon’. While our view for a weaker EUR was not wrong, we did not quite expect the ease by which EUR cracked 1.1200 yesterday (24 Nov) and dropped to 1.1184. While conditions remain oversold, the breach of 1.1200 has opened up the way for EUR to weaken to 1.1160. All in, EUR is expected to stay weak as long as it does not move above 1.1270 (‘strong resistance’ level was at 1.1325 yesterday). Looking ahead, the next support level of note below 1.1160 is at 1.1100.”
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