Peter Chia and Quek Ser Leang, FX Strategists at UOB Group, suggested that EUR/USD could accelerate losses on a breakdown of 1.0470.

Key Quotes

24-hour view: “The sharp and swift sell-off in EUR came as a surprise as it plummeted to 1.0491 before rebounding. The rapid decline appears to be running ahead of itself but there is room for the weakness in EUR to extend even though a break of last week’s low at 1.0470 appears unlikely. On the upside, a break of 1.0600 (minor resistance is at 1.0570) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “Yesterday (05 May, spot at 1.0615), we highlighted that ‘while it is premature to expect a major reversal, the current short-term EUR strength could extend to 1.0695’. EUR subsequently rose to 1.0641 before staging a surprisingly sharp drop to 1.0491. The breach of our ‘strong support’ at 1.0520 indicates that upside pressure has dissipated. On the downside, 1.0470 is a solid support and EUR has to close below this level before a sustained decline is likely. At this stage, it is not clear whether EUR has enough momentum to close below 1.0470. Looking ahead, if EUR closes below 1.0470, the next support level to monitor is at 1.0420.”