Euro (EUR) could test the 1.1380 level against US Dollar (USD); a sustained drop below this level seems unlikely. In the longer run, EUR view remains negative; the next level to watch is 1.1350, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

EUR view remains negative

24-HOUR VIEW: "The sharp selloff that sent EUR plunging to a low of 1.1404 was surprising (we were expecting consolidation). What is not surprising, is conditions are deeply oversold. However, the weakness has not stabilised, and today, EUR could test the 1.1380 level (there is another support level at 1.1400). Given the oversold conditions, a sustained drop below this level seems unlikely. On the upside, resistance levels are at 1.1460 and 1.1490."

1-3 WEEKS VIEW: "We turned negative on EUR two days ago, 29 Jul (spot at 1.1595). We indicated that it 'is likely to break the 1.1540/1.1555 support zone.' After EUR broke the support zone, we indicated yesterday (30 Jul, spot at 1.1550) that 'the level to watch now is 1.1500.' We did not expect EUR to quickly break below 1.1500 and plunge to 1.1399. EUR closed sharply lower by 1.22% (1.1404). We maintain our negative EUR stance. From here, the next level to watch is 1.1350. To maintain its strong downward momentum, EUR must hold below 1.1550 (‘strong resistance’ level was at 1.1655)."