UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang note EUR/USD risks a deeper retracement below the 1.0655 level in the near term.

Key Quotes

24-hour view: “Yesterday, we held the view that EUR ‘could test the 1.0655 level before a more sustained recovery is likely’. While our view was not wrong as EUR rebounded from a low of 1.0653, the recovery did not gain much traction. Today, the risk still appears to be tilted to the downside but while EUR could drop below 1.0655 again, it is unlikely to challenge the major support at 1.0615. Resistance is at 1.0715, followed by 1.0730.”

Next 1-3 weeks: “We continue to hold the same view as yesterday (16 Feb, spot at 1.0690). As highlighted, downward momentum is building again but EUR has to break and stay below 1.0655 before a sustained decline is likely. The chance of a sustained decline will increase as long as EUR does not move above 1.0760 (no change in ‘strong resistance’ level) within the next couple of days. Looking ahead, a clear break of 1.0655 will shift the focus to 1.0615, followed by 1.0535.”