Euro (EUR) could drop to 1.1585 before stabilization can be expected; the major support at 1.1560 is unlikely to come under threat. In the longer run, weakness in EUR has likely resumed, with scope for a decline to 1.1560, UOB Group's FX analysts Quek Ser Leang and Lee Sue Ann note.

Major support at 1.1560 is unlikely to come under threat

24-HOUR VIEW: "We noted yesterday that 'the current price movements are likely part of a range-trading phase', and we expected EUR to 'trade between 1.1625 and 1.1660'. Our view was incorrect, as EUR fell to a low of 1.1592 before closing on a soft note at 1.1606 (-0.31%). Downward momentum is increasing, albeit not significantly. Today, as long as EUR holds below 1.1635 (minor resistance is at 1.1625), it could drop toward 1.1585 before stabilization can be expected. Based on the current momentum, we do not expect the major support at 1.1560 to come under threat."

1-3 WEEKS VIEW: "On Tuesday (13 Jan, spot at 1.1665), we indicated that 'the weakness in EUR from early last week has stabilized', and we expected EUR to 'consolidate between 1.1615 and 1.1730'. Yesterday (15 Jan, spot at 1.14645), we highlighted that 'the price action still appears to be part of a consolidation, but we now expect EUR to trade in a lower and narrower range of 1.1600/1.1700'. EUR then broke below 1.1600 as it dropped to a low of 1.1592. The breach of 1.1600 suggests that the weakness in EUR has likely resumed, with scope for a decline to 1.1560. We will maintain our view as long as EUR holds below 1.1650 (‘strong resistance’ level)."