According to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, the prospects for a sustained drop below 1.0615 in EUR/USD appear diminished for the time being.

Key Quotes

24-hour view: “We expected EUR to weaken last Friday but we were of the view that it ‘is unlikely to challenge the major support at 1.0615’. While EUR cracked 1.0615 (low of 1.0611) in London trade, it rebounded strongly to end the day higher by 0.24% (1.0694). The rebound amid oversold conditions suggests EUR is unlikely to weaken further. Today, EUR is more likely to consolidate within a range of 1.0650/1.0720.”

Next 1-3 weeks: “Our most recent narrative was from last Thursday (16 Feb, spot at 1.0690) where ‘downward momentum is building again but EUR has to break and stay below 1.0655 before a sustained decline is likely’. We indicated, ‘a clear break of 1.0655 will shift the focus to 1.0615, followed by 1.0535’. While EUR subsequently took out both 1.0655 and 1.0615, it rebounded strongly from 1.0611 to end the day higher by 0.24% (1.0694). Downward momentum has waned somewhat with the strong rebound and the likelihood of a sustained decline in EUR below 1.0615 is not high. That said, only a breach of 1.0740 (‘strong resistance’ level was at 1.0760 last Friday) would indicate that the current downward pressure.”