EUR/USD bearish below 1.1680 – UOB

A daily close below 1.1680 should shift the pair’s outlook to bearish from neutral, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “The anticipated ‘extension lower’ turned into a full-fledged decline that hit an overnight low of 1.1686. While this has clearly shifted the immediate pressure to the downside, it appears too soon to expect sustained move below the major 1.1685/90 support (this level was tested last week as well but held). EUR is more likely to consolidate its loss for now and trade sideways at these lower levels (before further weakness can be expected at a later stage). Expected range for today; 1.1690/1.1775”.

Next 1-3 weeks: “The ease of which the 1.1750 support was taken out came as a surprise. As highlighted yesterday, “a break below 1.1750 would indicate a retest of last week’s low near 1.1685/90”. While EUR rebounded from an overnight low of 1.1686, the rapid pace of the decline suggests that the immediate pressure has shifted to the downside. From here, a NY closing below 1.1680 would indicate that EUR has moved into a bearish phase. In view of the strong rally over the past several months, any decline is viewed as a longer-term ‘pull-back’ and may be ‘limited’ to the rising trend-line support on the daily chart. On the upside, resistance is at 1.1775 but only a move back above 1.1810 would indicate the risk for a shift to a bearish phase has subsided”.