FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang suggested further downside in EUR/USD is expected to meet tough contention around 1.0580 in the near term.

Key Quotes

24-hour view: “We expected EUR to ‘consolidate and trade between 1.0685 and 1.0765’ yesterday. We did not expect the sharp drop to a low of 1.0625 during NY session. While the rapid decline appears to be running ahead of itself, there is scope for EUR to dip below 1.0625. The next major support at 1.0570 is not expected to come under threat (there is another support at 1.0600). On the upside, a breach of 1.0700 (minor resistance is at 1.0680) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “We highlighted yesterday (01 Jun, spot at 1.0735) that the recent strong phase in EUR has run its course and we expected EUR to consolidate and trade within a range of 1.0625/1.0790. We did not expect the rapid manner by which EUR approaches the bottom of the expected range at 1.0625 (low of 1.0625 in NY). The rapid build-up in downward momentum has shifted the risk in EUR to the downside. However, any weakness is expected to encounter solid support at 1.0580. The downside risk is intact as long as EUR does not move above 1.0730 (‘strong resistance’ level).”