The Euro (EUR) appears to have entered a trading phase between 1.1695 and 1.1750. In the longer term, the bias remains towards the downside, but the euro should close below 1.1680 before a move towards 1.1650 is expected, noted UOB Group forex analysts Kwik Ser Liang and Peter Chia.
Below 1.1680, a move towards 1.1650 can be expected
24-hour view: “We expected the Euro to ‘head lower’ yesterday, but noted that ‘any decline is unlikely to threaten key support at 1.1680’. Although the Euro fell more than expected to 1.1658, it rebounded strongly from the bottom to close slightly higher by 0.01% at 1.1720. It appears that the Euro has entered a range trading phase, and is likely to trade between 1.1695 And 1.1695.
1-3 week view: “Here are excerpts from our update yesterday (05 Jan, spot at 1.1715). “The bias from here is to the downside towards 1.1680. Looking ahead, if the Euro breaks and settles below this level, it could lead to a bigger pullback towards 1.1650. The current moderate downward pressure will remain in place as long as the ‘strong resistance’ level, now at 1.1775, is not breached.” We did not expect the EUR to reach the 1.1680 level so quickly, as it fell to a low of 1.1658. However, the EUR was unable to hold on to its decline, as it rebounded strongly from the bottom. While the bias remains tilted to the downside, the EUR must close below 1.1680 before we expect a move towards 1.1650. The possibility of the Euro closing below 1.1680 will remain as long as 1.1765 (the “strong resistance” level at 1.1775 yesterday) is not breached.
