24-hour view: While we expected EUR to edge lower yesterday, we were of the view that “any decline is likely part of a 1.0885/1.0955 range.” However, EUR dropped to 1.0850 in NY trade before rebounding quickly. Despite the rebound, the bias appears to be on the downside. Today, EUR could retest the 1.0850 level before the risk of a more sustained rebound increases. The major support at 1.0780 is not expected to come under threat. Resistance is at 1.0910, followed by 1.0930. 

Next 1-3 weeks: EUR broke below our ‘strong support’ level of 1.0860 in NY trade and reached a low of 1.0850. The breach of the ‘strong support’ level indicates that the EUR strength that started last Wednesday has ended. From here, EUR is likely to trade in a range, probably between 1.0780 and 1.0965.