FX Strategists at UOB Group noted EUR/USD could slip back to the 1.0810 area if it clears the 1.0880 region in the near-term.

Key Quotes

24-hour view: “We expected EUR to weaken yesterday but were of the view ‘last year’s low at 1.0877 may not come into the picture’. Our expectation was not wrong as EUR rebounded quickly from a low of 1.0889. The rapid bounce amid severely oversold conditions suggests that a temporary bottom may be in place. While it is too early to expect a sustained recovery, there is scope for EUR to edge upwards but any advance is viewed as part of a 1.0900/1.0950 range (a sustained rise above 1.0950 is not expected).”

Next 1-3 weeks: “EUR extended its loss as it dropped to a low of 1.0906 yesterday. The price action was not surprising. We first detected the ‘pick up in downward momentum’ last Thursday (06 Feb, spot at 1.1000) and we ‘upgraded’ our negative view for three consecutive days in a row. For now, our narrative from yesterday (10 Feb, spot at 1.0945) wherein ‘solid downward momentum suggests the 2019 low of 1.0877 is within reach’ still stands. Looking forward, a breach of this major support could potentially lead to further rapid decline as the next support of note is not until 1.0810. Resistance is at 1.0950 but only a move above 1.0980 (‘strong resistance’ level was at 1.1010 yesterday) would indicate the current weak phase has stabilized.”