EUR/USD risks further decline near term, although a sustained drop below 0.9900 appears out of favour according to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘the outsized decline in EUR has scope to dip below 0.9930 before stabilization is likely’. However, EUR did not dip below 0.9930 as it traded in a relatively quiet manner between 0.9954 and 1.0023 before closing little changed at 0.9977 (+0.07%). The movement is likely part of a consolidation phase and we expect EUR to trade sideways for today, likely between 0.9950 and 1.0020.”

Next 1-3 weeks: “Our update from yesterday (14 Sep, spot at 0.9980) still stands. As highlighted, the outsized drop on Tuesday appears to be overdone but there is room for EUR to weaken to 0.9900. At this stage, a sustained decline below this level appears unlikely. All in, as long as the ‘strong resistance’ at 1.0070 (no change in level from yesterday) is not breached, EUR is likely to stay under pressure.”