UOB economists Quek Ser Leang and Lee Sue Ann notes EUR/USD remains under mild pressure after breaking below 1.1720 and touching 1.1695. While intraday conditions look oversold and suggest a 1.1700–1.1755 range, the 1–3 week view still points to a downside bias toward 1.1675. Further losses toward last month’s 1.1655 low are seen as less likely unless momentum strengthens.

Euro pressured but near-term oversold

"24-HOUR VIEW: After EUR fell to a low of 1.1721 two days ago, we highlighted yesterday that “despite the relatively sharp drop, downward momentum has not increased by much.” However, we were of the view that EUR “could retest the 1.1720 level before a recovery can be expected.” We did not expect EUR to drop to a low of 1.1695. EUR recovered from the low to close 0.23% lower at 1.1710. Tentative slowdown in downward momentum, combined with oversold conditions, suggests that instead of continuing to weaken, EUR is more likely to trade in a range today, probably between 1.1700 and 1.1755."

"1-3 WEEKS VIEW: Our most recent narrative was from two days ago (12 May, spot at 1.1780), in which we stated that EUR “is likely to trade between 1.1720 and 1.1820.” Yesterday, EUR broke below 1.1720 and dropped to a low of 1.1695. There has been an increase in downward momentum, but not significantly. From here, EUR could trade with a downside bias toward 1.1675. Further declines are not ruled out, but based on the current momentum, last month’s low, near 1.1655, is likely out of reach. The downside bias will remain intact as long as EUR holds below the ‘strong resistance’ level, now at 1.1765."

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