In opinion of Quek Ser Leang at UOB Group’s Global Economics & Markets Research, EUR/USD could extend the leg lower and revisit the 2020 low in the 1.0630 region in the near term.

Key Quotes

“… when EUR/USD was trading at 1.0865, we highlighted that the risk for 2Q22 is on the downside but EUR/USD ‘has to break the long-term support at 1.0805 first before further weakness is likely’. While EUR/USD dropped below 1.0805 two weeks ago, it was unable to make much headway on the downside until yesterday (25 Apr) when it lurched lower and dropped to 1.0695.”

“Shorter-term downward momentum has improved considerably and a break of the 2020 low of 1.0635 would not be surprising. The next support below 1.0635 is near 1.0340, the low in 2017. It is left to be seen if EUR/USD can break 1.0340 within these 1 to 2 months. In order to maintain the current downward momentum, EUR/USD should ideally stay below 1.1030. However, only a breach of the 21-week exponential moving average (currently at 1.1110) would indicate that the weakness in EUR/USD has stabilized.”