Oversold Euro (EUR) decline could test 1.1635 before a more sustained recovery is likely. In the longer run, bias for EUR remains on the downside; it remains to be seen if 1.1615 will come into view, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Bias for EUR remains on the downside

24-HOUR VIEW: "Two days ago, we expected EUR to edge lower, but we noted that 'any decline is unlikely to reach the major support at 1.1650'. After EUR edged to a low of 1.1671, we highlighted the following yesterday: 'Downward momentum remains mild, and we continue to expect EUR to edge lower today. This time around, the major support at 1.1650 may be tested'. Our assessments were not wrong, as EUR dipped to a low of 1.1642 before recovering slightly to close at 1.1658 (-0.13%). Although the decline is entering oversold territory, and downward momentum is starting to ease, there is scope for EUR to test 1.1635 before a more sustained recovery is likely. The next support at 1.1615 is likely out of reach. To sustain the momentum, EUR must hold below 1.1690, with minor resistance at 1.1675."

1-3 WEEKS VIEW: "We turned negative on EUR at the start of this week. Yesterday (08 Jan, spot at 1.1675), we stated that the recent price action 'suggests EUR could decline to 1.1650'. We added, 'it is too early to determine if EUR can maintain a foothold below this level'. Yesterday, EUR dipped to 1.1642 before closing at 1.1658 (-0.13%). Although there has been no significant increase in downward momentum, the bias for EUR remains on the downside. That said, it remains to be seen if 1.1615 will come into view. On the upside, a breach of 1.1710 (‘strong resistance’ level was at 1.1730 yesterday) would indicate that the downside bias has faded."