Oversold decline in Euro (EUR) could drop below 1.1600; the major support at 1.1570 is likely out of reach. In the longer run, bias for EUR has shifted to the downside; it is too early to determine whether EUR can break below the major support at 1.1570, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Bias for EUR has shifted to the downside

24-HOUR VIEW: "After EUR rose more than we expected on Monday, we indicated yesterday, Tuesday, that 'the upward bias appears to have faded,' and we expected EUR to 'consolidate in a range of 1.1685/1.1735.' Instead of consolidating, EUR fell sharply, reaching a low of 1.1610 before recovering to close at 1.1638, down 0.61%. While oversold, the decline has not stabilised. Today, EUR could dip below 1.1600, but given the oversold conditions, it is unlikely to reach the major support at 1.1570. Resistance is at 1.1655; a breach of 1.1675 would indicate that the weakness is starting to stabilise."

1-3 WEEKS VIEW: "We turned positive on EUR late last week. After EUR rose, we highlighted yesterday (02 Sep, spot at 1.1710) “the risk for EUR remains on the upside, but it must first close above 1.1755 before a move toward 1.1790 can be expected.” We did not anticipate the sharp drop that broke below our ‘strong support’ level of 1.1660 (low of 1.1610). Not only has upward momentum faded, but downward momentum has also increased. We expect EUR to trade with a downward bias now, but it is too early to determine whether EUR can break clearly below the major support at 1.1570. The downward bias will remain intact as long as EUR holds below 1.1700 (‘strong resistance’ level)."