Instead of continuing to decline, EUR is likely to trade in a range between 1.1600 and 1.1660. In the longer run, risk for EUR remains on the downside, likely toward the major support at 1.1570, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Risk for EUR remains on the downside

24-HOUR VIEW: "EUR dropped sharply to a low of 1.1647 on Tuesday. Yesterday, Wednesday, we highlighted that 'the decline is oversold, but with no sign of stabilisation just yet, EUR could dip below 1.1645.' However, we were of the view that 'any further decline may not reach the next major support at 1.1610.' The anticipated decline exceeded our expectations, as EUR dropped to 1.1597 before rebounding to close at 1.1626 (-0.25%). The rebound from oversold conditions suggests that instead of continuing to decline, EUR is more likely to trade in a range today, expected to be between 1.1600 and 1.1660."

1-3 WEEKS VIEW: "We revised our view yesterday (08 Oct, spot at 1.1655), indicating that 'the downside risk for EUR has increased.' We also indicated that 'if EUR breaks and holds below 1.1645, it would then likely threaten the significant support at 1.1610.' We were not wrong, even though we didn’t quite expect EUR to reach 1.1610 so soon, as it dropped to a low of 1.1597. The risk remains on the downside, likely toward the major support at 1.1570. That said, oversold conditions could lead to a couple of days of consolidation first. The downside risk will remain intact as long as EUR holds below the ‘strong resistance’ at 1.1695 (level was at 1.1720 yesterday)."