UOB Group’s FX Strategists Lee Sue Ann and Quek Ser Leang noted EUR/USD risks a deeper pullback if 1.0470 is cleared in the next weeks.

Key Quotes

24-hour view: “We highlighted last Friday that ‘there is room for the weakness in EUR to extend even though a break of last week’s low at 1.0470 appears unlikely’. EUR subsequently dropped to 1.0481 before rebounding. The current movement appears to be part of consolidation. In other words, EUR is likely to trade sideways for today, expected to be within a range of 1.0490/1.0585.”

Next 1-3 weeks: “Our view from last Friday (06 May, spot at 1.0540) still stands. As highlighted, EUR has to close below the solid support at 1.0470 before a sustained decline is likely. The chance for EUR to close below 1.0470 would remain intact as long as it does not move above 1.0640. Looking ahead, if EUR closes below 1.0470, the next support level to monitor is at 1.0420.”