24-hour view: The sharp selloff that sent EUR to a fresh year’s low of 1.0475 came as a surprise (we were expecting range trading). While the rapid decline appears to be overdone, there is no sign of stabilisation just yet. Today, EUR is likely to weaken further, but the support level at 1.0430 could be out of reach. On the upside, 1.0535 (minor resistance is at 1.0505) is likely strong enough to cap any intraday rebound.

Next 1-3 weeks: Yesterday (02 Oct, spot at 1.0560), we highlighted that EUR “appears to have entered a consolidation phase,” and we expected it to trade in a range between 1.0495 and 1.0650. We did not anticipate EUR to plunge to a fresh year’s low of 1.0475. The price action suggests that EUR is not in a consolidation phase. Instead, it is still likely in a bearish phase. From here, as long as EUR remains below 1.0565, it is likely to weaken to 1.0430, potentially below 1.0400.