Euro (EUR) could edge lower; any decline is unlikely to reach the major support at 1.0255. In the longer run, EUR has to break clearly below 1.0255 before further losses can be expected, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann note.

Below 1.0255 further losses can be expected

24-HOUR VIEW: “Following EUR sharp decline to a low of 1.0273 on Wednesday, we indicated yesterday (Thursday) that ‘the brief decline did not result in a significant increase in downward momentum.’ We added, ‘instead of declining further today, EUR is more likely to trade in a 1.0275/1.0355 range.’ EUR subsequently traded in a narrower range than expected (1.0282/1.0321), closing at 1.0298 (-0.19%). Despite the relatively quiet price action, downward momentum has increased slightly. Today, EUR could edge lower, but any decline is unlikely to reach the major support at 1.0255 (there is another support at 1.0275). On the upside, resistance levels are at 1.0320 and 1.0355.”

1-3 WEEKS VIEW: “Not much has changed since our update yesterday (09 Jan, spot at 1.0315). As highlighted, there has been a tentative buildup in downward momentum. However, EUR ‘has to break clearly below 1.0255 before further losses can be expected.’ The likelihood of EUR breaking clearly below will increase, provided that the ‘strong resistance’ level, currently at 1.0400 (no change from yesterday), is not breached.”