FX Strategist Quek Ser Leang at UOB Group’s Global Economics & Markets Research noted that a test of the major support at 0.9670 looks unlikely for the time being.

Key Quotes

24-hour view: “On 06 Jul 2022 (when EUR/USD was trading at 1.0265), we highlighted in our Chart of the Day update that ‘the breach of the critical support at 1.0350 coupled with solid downward momentum is likely to lead to further EUR/USD weakness’. We added, ‘the next key level to monitor is at 1.0000’ and ‘only a break of declining trend-line resistance and the 55-day exponential moving average would indicate that the downtrend in EUR/USD from earlier this year has stabilized’.”

“Our view for EUR/USD to weaken turned out to be correct as it dropped to a low of 0.9950 in mid-Jul before rebounding. The rebound edged slightly above the 55-day exponential moving average but did not break the declining trend-line resistance (high of 1.0368 in midAug). EUR/USD dropped quickly from 1.0368 and last week, it took out the 0.9950 low. Despite breaking the support level, EUR/USD has not been able to make much headway on the downside (low has been 0.9899).”

“That said, the risk for EUR/USD is still on the downside but downward momentum is beginning to slow. The next support level of note is at the bottom of what appears to be a descending channel formation. At this stage, the chance for EUR/USD to decline to the bottom of the channel (currently at 0.9670) is not high. On a shorter-term note, 0.9900 is already a strong support level. Resistance wise, the 55-day exponential moving average, top of the descending channel and the bottom of the daily Ichimoku cloud are all near 1.0220. A break of this key (and formidable) resistance level would greatly diminish the odds of further EUR/USD weakness within these couple of months.”