EUR/USD diminishing odds for a breakdown of 1.1400 – UOB

In view of FX Strategists at UOB Group, a break below the 1.1400 level in EUR/USD appears to have lost momentum in the near term.

Key Quotes

24-hour view: “Instead of trading sideways (as expected yesterday), EUR reversed an initial up-move to a high of 1.1550 before dropping quickly to an overnight low of 1.1453. The subsequent soft daily closing in NY (1.1463) suggests there is room for further weakness. However, downward momentum is not strong and the major 1.1430 support is unlikely to yield so easily (next support is at 1.1400). Resistance is at 1.1495 followed by 1.1520. The 1.1550 top is not expected to come into the picture”.

Next 1-3 weeks: “EUR broke the 1.1540 ‘key resistance’ but reversed quickly after touching a high of 1.1550. The subsequent weak daily closing in NY (1.1463, -0.43%) indicates that the underlying tone is still weak. That said, the prospect for a break of the major 1.1400 support has diminished. In order to improve the odds for a breach of 1.1400, EUR has to crack the strong 1.1430 level within these 1 to 2 days or the current price action would likely ‘morph’ into a consolidation phase. On the upside, the 1.1550 top is expected to be strong enough to cap any EUR strength, at least for the next few days”.