Euro: Downtrend versus US Dollar intact with key 1.1600 level – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann report EUR/USD has rebounded from 1.1607 but expects further gains to face strong resistance at 1.1685 in the near term. Over 1–3 weeks, they still see downside risk, with a clear break below 1.1600 shifting focus to 1.1570 unless 1.1685 gives way. Longer term, they see scope for further upside but doubt a break of 1.1800 for now.

Euro bounce seen as corrective only

"24-HOUR VIEW: While we expected EUR to “continue to weaken” yesterday, we indicated that “deeply oversold conditions suggest any decline is likely part of a lower range of 1.1600/1.1655.” We also highlighted that “a continued decline below 1.1600 is unlikely.” The subsequent price movements did not quite turn out as expected. EUR dipped to 1.1607 and then staged a robust rebound to 1.1660. There is room for EUR to rebound further, but any advance is expected to face strong resistance at 1.1685. Support is at 1.1635; a breach of 1.1620 would indicate that EUR is likely to range-trade instead of continuing to rebound."

"1-3 WEEKS VIEW: We highlighted yesterday (18 May, spot at 1.1620) that “strong downward momentum continues to suggest downside risk for EUR.” We added, “a clear break below 1.1600 will shift the focus to 1.1570.” We continue to hold the same view. On the upside, if EUR breaks above 1.1685 (no change in ‘strong resistance’ level), it would mean that the decline from late last week has stabilised."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)