Sharp rebound in Euro (EUR) has scope to extend but is unlikely to reach 1.1655. In the longer run, the likelihood of EUR reaching the 1.1490 during this phase of weakness is decreasing, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Likelihood of EUR reaching the 1.1490 is decreasing

24-HOUR VIEW: "Following the decline in EUR that reached a low of 1.1541 last Thursday, we highlighted the following on Friday: 'Conditions remain oversold, but with no signs of stabilisation just yet, EUR could drop below 1.1540. The next support at 1.1490 is unlikely to come into view today.' Our assessments were incorrect, as EUR dipped to 1.1555, and then staged a surprising sharp rebound in the NY session, reaching a high of 1.1630. While there is scope for the rebound to extend, there does not appear to be sufficient momentum to reach 1.1655. Support levels are at 1.1585 and 1.1560."

1-3 WEEKS VIEW: "We have held a negative EUR view since early last week (as annotated in the chart below). Last Friday (10 Oct, spot at 1.1565), we stated that 'the outlook for EUR remains negative, and it could decline further toward 1.1490.' We did not expect the subsequent strong rebound, as EUR rose to 1.1630 and then closed on a firm footing at 1.1618, up by 0.48%. Downward momentum is slowing, and the likelihood of EUR reaching 1.1490 during this phase of weakness is decreasing. However, only a breach of 1.1655 (no change in ‘strong resistance’ level from last Friday) would indicate that the weakness has stabilised."