Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group suggest EUR/USD could grind lower to the 1.0615 level in the near term.

Key Quotes

24-hour view: “We expected EUR to drop below 1.0755 yesterday and we held the view that ‘the next support at 1.0700 is unlikely to come under threat’. Our view was not wrong even though EUR dropped close to 1.0700 (low has been 1.0708). While conditions remain oversold, EUR could dip below 1.0700 before stabilization is likely. We do not expect the next major support at 1.0615 to come into view today (there is another support at 1.0670). Resistance is at 1.0750, followed by 1.0785. A break of the latter level would indicate that the weakness in EUR has stabilized.”

Next 1-3 weeks: “Yesterday (06 Feb, spot at 1.0795), we indicated that the price actions in EUR are likely the early stages of a pullback that could extend to 1.0700. While our view was not wrong, we didn’t quite expect EUR to approach 1.0700 so quickly (EUR dropped to a low of 1.0708 in NY trade). Further EUR weakness appears likely but oversold short-term conditions could slow the pace of any further decline. The next level to monitor below 1.0700 is at 1.0615. The downside risk in EUR is intact as long as it does not break above 1.0850 (‘strong resistance’ level was at 1.0890 yesterday).”