UOB’s Quek Ser Leang and Lee Sue Ann keep a cautious stance on EUR/USD after the pair slipped toward 1.1590. They see scope for a test of this major support, though a sustained drop below appears unlikely for now. However, a clear break under 1.1590 would open downside risk toward 1.1555 and potentially the 1.1540 trendline.

Major support at 1.1590 in focus

"24-HOUR VIEW: When EUR was at 1.1625 in the early Asian session yesterday, we highlighted the following: “The tentative increase in downward momentum suggests the bias for today is tilted to the downside. That said, given the lacklustre momentum, any decline is likely limited to a test of 1.1605. The next support at 1.1590 is unlikely to come under threat. On the upside, a breach of 1.1645 would indicate that EUR is likely to range-trade instead of trading with a downside bias.” Our view was not wrong, as EUR dropped to a low of 1.1594. Downward momentum has increased, albeit not significantly. Today, EUR could test the major support at 1.1590 before the risk of rebound increases Based on the prevailing momentum, a continued drop below 1.1590 seems unlikely. Resistance is at 1.1620, followed by 1.1635."

"1-3 WEEKS VIEW: We have held the same view since last Monday (25 May, spot at 1.1620), when we highlighted that EUR “is neutral now, and it is likely to trade between 1.1590 and 1.1685.” Yesterday, EUR declined to a low of 1.1594. Downward momentum is increasing, and if EUR breaks and holds below 1.1590, it would increase the risk of a decline toward the significant support at 1.1555. The likelihood of EUR breaking clearly below 1.1590 will remain intact as long as 1.1655 (‘strong resistance’ level) is not breached."

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