EUR/USD: downward pressure is back again (UOB)

Analysis of Wednesday's price action:

The sudden drop in the EUR/USD, which easily dissipated several strong levels of support, was a surprise. The rapid decline seemed to continue, but without any sign of stabilisation, the current weakness could extend to 1.1360. At this point, we do not expect the next support at 1.1330 to return. On the upside, only a move above 1.1460 would indicate that weakness has stabilised (minor resistance is at 1.1430).

Short term analysis:

We pointed out on Tuesday (15 January at 1.1470) that the EUR/USD was probably "back down" in a consolidation phase and is expected to trade sideways in a range between 1.1410/1.1550. The EUR then easily broke through the low end of the expected range at 1.1410 and fell to a low of 1.1378 before ending the day on a low note (close in NY at 1.1414, -0.52%). The rapid recovery in the downward momentum was a surprise and from there we expect the euro to remain under pressure (albeit slightly). While the EUR/USD could test 1.1330 in the coming days, the next support level at 1.1300 is a major level and will not let go as easily. Overall, only a return above 1.1500 (a minor resistance is at 1.1460) would indicate that the slight downward pressure has subsided.