A breach of 0.9900 could accelerate losses in EUR/USD in the near term, suggest FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “The sharp plunge in EUR to a low of 0.9909 came as a surprise (we were expecting EUR to range-trade). Despite the rapid bounce from the low, the risk for today is still on the downside. While a break of 0.9900 is not ruled out, it is left to be seen if EUR can maintain a foothold below this major support level. From here, the chance for EUR to drop to 0.9850 is not high. On the upside, a break of 1.0000 (minor resistance is at 0.9975) would indicate the downward pressure has eased.”

Next 1-3 weeks: “Yesterday (01 Sep, spot at 1.0040), we held the view that EUR is still consolidating albeit at a higher range of 0.9940/1.0125. We did not anticipate the sharp sell-off as EUR plunged to 0.9909 before closing lower by a whopping 1.12% (NY close of 0.9944), its largest 1-day drop in 1-1/2 months. The sharp drop has shifted the risk to the downside but EUR has to close below the major support at 0.9900 before further sustained decline is likely. The next support is at 0.9850. Overall, only a breach of 1.0035 (the current ‘strong resistance’ level) within these 1 to 2 days would indicate that the downside risk has dissipated.”