Euro (EUR) has scope to break below 1.1715, but it might not be able to maintain a foothold below this level. In the longer run, downward momentum is starting to build; if EUR breaks and holds below 1.1715, it is likely to trigger a drop toward 1.1670, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Downward momentum is starting to build

24-HOUR VIEW: "EUR rose to a high of 1.1819 two days ago. Yesterday, in the early Asian session, when it was at 1.1810, we indicated that ''there has been no further increase in upward momentum, and today, we expect EUR to range-trade, most likely between 1.1780 and 1.1830.' Our view turned out to be incorrect, as instead of range-trading, EUR plummeted and closed down by 0.66% at 1.1737. Conditions are deeply oversold, but the sharp decline has scope to break below 1.1715. Given the oversold conditions, EUR might not be able to maintain a foothold below this level, and the next major support at 1.1670 is also unlikely to come into view. On the upside, resistance levels are at 1.1755 and 1.1775."

1-3 WEEKS VIEW: "We have maintained the same view since last Friday (19 Sep, spot at 1.1785), in which we stated EUR 'is likely to trade in a range of 1.1715/1.1855.' EUR subsequently dipped to a low of 1.1725, rebounded to 1.1819, and then, in a sharp move yesterday, dropped back down to a low of 1.1727. Downward momentum is starting to build, and if EUR breaks and holds below 1.1715, it is likely to trigger a drop toward the next major support at 1.1670. To maintain the build-up in momentum, EUR must not break above 1.1795 (‘strong resistance’ level)."