UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang note EUR/USD could revisit the 1.0700 region once 1.0750 is cleared.

Key Quotes

24-hour view: “Our view for EUR to trade sideways yesterday was incorrect as it plummeted to 1.0758, the same low as last week. Downward momentum has improved but EUR has to break clearly below the major support at 1.0750 before a sustained decline is likely. That said, the next major support at 1.0700 is unlikely to come into view today. The risk of EUR breaking clearly below 1.0750 will remain intact as long as it stays below 1.0805 (minor resistance is at 1.0785).”

Next 1-3 weeks: “We have held a negative EUR view for two weeks now. In our latest narrative from two days ago (22 May, spot at 1.0820), we indicated that the likelihood of EUR breaking clearly below 1.0750 has diminished. We added, ‘only a break above 1.0860 would indicate the EUR weakness has stabilized’. Yesterday, EUR fell to a low of 1.0758. Downward momentum has improved, albeit not much. EUR has to crack 1.0750 in these 1 to 2 days for it to drop further to 1.0700. If EUR were to breach 1.0835 (‘strong resistance’ level previously at 1.0860), it would suggest that it is not weakening further.”