The negative view in EUR/USD remains unchanged for the time being, note Economist Lee Sue Ann and Markets Strategist Quek Ser Leang and UOB Group.

Key Quotes

24-hour view: “We expected EUR to ‘weaken further’ last Friday but we were of the view that ‘it is unlikely to break the major support at 1.0850 today’. Our view of EUR weakness was correct even though it slightly breached 1.0850 (low has been 1.0846). While severely oversold, EUR weakness has yet to stabilize. However, the major support at 1.0800 is likely out of reach today. Resistance is at 1.0870, followed by 1.0895.”

Next 1-3 weeks: “Last Friday (12 May, spot at 1.0915), we turned negative in EUR and highlighted that it ‘is likely to head lower in the coming days’. We added, ‘the level to watch is 1.0850, as a break of this key support could potentially trigger a sharp and rapid drop in EUR’. While our view was not wrong, we did not quite expect EUR to breach 1.0850 so quickly as it plummeted to a low of 1.0846 (-0.60%). There is no change in our negative EUR view and the next level to watch is 1.0800. Looking ahead, if EUR can break and stay below 1.0800, the next level to focus on is 1.0720. We will hold a negative EUR view as long as it does not break above 1.0935 (‘strong resistance’ level was at 1.0990 last Friday).”