The chances for EUR/USD to close below 0.9900 seem to have lost traction in past sessions, note FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “Yesterday, we expected EUR to break 0.9900 but we were of the view that ‘the next support at 0.9850 is unlikely to come under threat’. While our view was not wrong as EUR dropped to 0.9875, we did not expect the subsequent strong bounce from the low. The rebound has scope to extend but is unlikely to break the strong resistance at 1.0005 (there is another resistance at 0.9975). Support is at 0.9925 followed by 0.9890.”

Next 1-3 weeks: “Last Friday (02 Sep, spot at 0.9945), we highlighted that the risk for EUR has shifted to the downside. We added, EUR has to close below the major support at 0.9900 before a sustained decline is likely. Yesterday (05 Sep), EUR dropped to a fresh multi-year low of 0.9875 before rebounding to close at 0.9926 (-0.25%). There is no change in our view for now even though after the strong rebound in NY yesterday, the odds for EUR to close below 0.9900 have diminished. On the upside, a break of the ‘strong resistance’ at 1.0005 (no change in level from yesterday) would indicate that the next support at 0.9850 is not coming into the picture.”