FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang noted the current weakness in EUR/USD could mitigate above 1.0035 level.

Key Quotes

24-hour view: “We highlighted yesterday that ‘further EUR decline is likely’ and indicated ‘the next support is at 0.9980 (minor support is at 0.9900)’.  EUR subsequently tested the minor support (low of 0.9899), rebounded strongly to 1.0018 before pulling back to end the day at 0.9967 (+0.26%). Downward pressure has eased and this coupled with oversold conditions suggests EUR has likely moved into a consolidation phase. In other words, EUR is likely to trade sideways for today, expected to be between 0.9920 and 1.0010.”

Next 1-3 weeks: “Yesterday (23 Aug, spot at 0.9935), we highlighted that solid momentum is likely to lead to further EUR weakness. We indicated the levels to focus on are 0.9870 and 0.9830. EUR subsequently dropped to 0.9899 before staging a surprisingly robust rebound (high of 1.0018). Shorter-term downward momentum has waned but there is still room for EUR to weaken. Only a breach of 1.0035 (no change in ‘strong resistance’ level from yesterday) would indicate that the EUR weakness that started last week has run its course. Meanwhile, oversold conditions could lead to a couple of days of consolidation first.”