UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang note EUR/USD faces extra weakness once 1.0615 is cleared.

Key Quotes

24-hour view: “Yesterday, we held the view that EUR ‘is likely to consolidate between 1.0660 and 1.0710’. Instead of consolidating, EUR traded in a relatively choppy manner as it popped to a high of 1.0697, dropped quickly to 1.0636 before closing at 1.0646 (-0.34%). Downward momentum has improved a tad and EUR is likely to edge lower. In view of the lackluster momentum, a sustained decline below the major support at 1.0615 is unlikely today. Resistance is at 1.0670, followed by 1.0695.”

Next 1-3 weeks: “In our latest narrative from two days ago (20 Feb, spot at 1.0685), we highlighted that ‘downward momentum has waned and the likelihood of a sustained decline in EUR below 1.0615 is not high’. Yesterday, EUR dropped to 1.0636 before settling at 1.0646 (-0.34%). Downward momentum has increased, albeit not much. While EUR could break below 1.0615, it has to stay below this level before further weakness is likely. Overall, only a breach of 1.0725 (‘strong resistance’ level previously at 1.0740) would indicate that the weakness in EUR that started late last week has stabilized. Looking ahead, the next support level below 1.0615 is at 1.0570.”