FX Strategists at UOB Group noted EUR/USD faces a potential drop to the 1.1240 region in the next weeks.

Key Quotes

24-hour view: “We expected EUR to weaken yesterday but we were of the view that ‘the major support at 1.1300 is unlikely to come into the picture’. The anticipated weakness exceeded our expectations as EUR dropped to 1.1278 during late NY session. From here, EUR is likely to weaken further but oversold conditions suggest any decline could be limited  to 1.1270. The next major support at 1.1240 is unlikely to come under threat. On the upside, a breach of 1.1350 (minor resistance is at 1.1330) would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “Yesterday (14 Feb, spot at 1.1365), we highlighted downward pressure has increased slightly and we expected EUR to ‘edge lower and test 1.1300’. We did not anticipate the rapid manner by which EUR dropped below 1.1300 (low of 1.1278). Downward momentum has improved and EUR is likely to weaken further. The next level to watch is at 1.1240. Overall, the downward pressure in EUR is intact as long as EUR does not move above 1.1400 (‘strong resistance’ level was at 1.1440 yesterday).”