Euro (EUR) could test 1.1580; a sustained drop below this level is unlikely. In the longer run, downward momentum is building; EUR is likely to trade with a downward bias, potentially retesting the 1.1540 level, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

EUR is likely to trade with a downward bias

24-HOUR VIEW: "In the early Asian session yesterday, when EUR was at 1.1645, we indicated that 'the softer underlying tone suggests EUR is likely to edge lower within a range of 1.1625/1.1660'. We added that EUR 'is unlikely to break clearly below 1.1625.' However, EUR not only broke below 1.1625, but also dropped further to a low of 1.1597. Today, EUR could test 1.1580, but a continued decline below this level is unlikely. The major support at 1.1540 is also unlikely to come into view for now. On the upside, resistance levels are at 1.1620 and 1.1640."

1-3 WEEKS VIEW: "Yesterday (21 Oct, spot at 1.1645), we highlighted that 'the current price movements are likely part of a range-trading phase, expected to be within a range of 1.1580/1.1690.' We did not expect EUR to drop near to 1.1680 so quickly as it fell to a low of 1.1597 in the late NY session. Downward momentum is building, and from here, we expect EUR to trade with a downward bias, potentially retesting last week’s low of 1.1540. The downward bias will remain intact as long as the ‘strong resistance’ level, currently at 1.1660, is not breached."