EUR/USD could slip back to 1.1000 in the near term – UOB

FX Strategists at UOB Group suggested EUR/USD could probe the lower bound of the ongoing range in the next weeks.

Key Quotes

24-hour view: “Expectation for EUR to “trade sideways” was incorrect as it dropped to a 4-week low of 1.1040 before settling on a soft note (NY close of 1.1055). Downward momentum has clearly improved, albeit not by much. From here, barring a move above 1.1095 (minor resistance at 1.1075), EUR could continue to move lower. That said, the month-to-date low of 1.1025 is likely out of reach (the overnight low of 1.1040 is acting as a relatively strong support)”.

Next 1-3 weeks: “We detected the weakened underlying tone yesterday (29 Aug, spot at 1.1085) and warned that the recent price action in EUR “looks more akin to be part of a consolidation instead of a corrective rebound”. We added, a breach of 1.1050 would indicate that EUR has moved into a consolidation phase. In that context, the decline in EUR to 1.1040 yesterday was not exactly surprising. Overall, EUR is expected to trade sideways from here even though the weakened underlying tone suggests it could probe the bottom of the expected 1.1000/1.1130 range first”.