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#1 27-11-2019 10:14:08

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EUR/USD: 2 banks expect imminent break below 1.10, how low can it go?

EUR/USD: 2 banks expect imminent break below 1.10, how far could the euro drop?

The EUR/USD pair remains under pressure today, and still threatens to fall below the key 1.10 level, after a timid rebound attempt that led to a peak at 1.1025 on Tuesday.

The weakness of the euro does not seem to be related to any particular news today, but this afternoon the EUR/USD pair will be subject to the potential influence of several key US economic report releases, with orders for durable goods and a new estimate of Q3 GDP, as well as consumer spending, unemployment figures and the PCE price index at 14:30, then with the Chicago PMI index at 15:45 and housing sales at 16:00.

In the meantime, check out Commerzbank and UOB's short-term forecasts, both of which anticipate a further decline of the pair.

Commerzbank suggests that the euro-dollar pair will fall in the short term and that attention is turning to the mid-November low of 1.0989.

The bank believes that as long as this threshold is maintained, last week's high of 1.1097 could be revisited, with last month's peak of 1.1180 in the rear-view mirror.

"Above 1.1180, the channel at 1.1255 will be targeted. However, support at 1.0989 seems more and more exposed - a failure would trigger another lower leg in the direction of 1.0943" says the note.

"It is possible that we still have one last step to the base of the channel at 1.0844 and the Fibonnaci retracement at 1.0813 before seeing a sustained recovery," the bank adds.

As for UOB, they also expect a sharp decline of the EURUSD pair:

"We expected the euro to fall yesterday, but instead, it entered a kind of range in a tight 20-pip tunnel (between 1.1005 and 1.1025). The range of 20 pips seems to be the smallest this year for a day. The euro may continue to trade sideways in a 1.1005/1.1040 range today.

Looking ahead 1 to 3 weeks, the euro could trade with a downward bias towards 1.0965 even if the month's low should provide decent support for the coming days. The first resistance level to monitor is 1.1035, but only a move above 1.1065 would indicate that the current downward pressure has eased

EUR/USD hourly chart

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