Ella 
After the euro fell sharply to a low of 1.0572 on Monday, we emphasized yesterday that “there is room for the euro to fall further to 1.0555 before it is possible to stabilize.” However, the euro did not touch 1.0555, but fell to a low of 1.0560, and finally closed at 1.0570 (up 0.19%). Although EUR/USD still shows no signs of stabilizing, the downward momentum has not increased significantly. The euro could fall further to 1.0545 during the day before stabilizing. EUR/USD is unlikely to hit the key support level at 1.0515. On the upside, a break above 1.0605 (with second resistance at 1.0590) would suggest no further weakness in the currency.
Next 1-3 weeks: Our expectations from yesterday (EUR/USD was at 1.0590 on September 26) are still valid. As highlighted by the Bank, the latest EUR/USD moves suggest that EUR/USD could weaken towards 1.0515 going forward. If the euro maintains resistance at 1.0650 (yesterday’s “strong resistance” was at 1.0665), downside risks remain.
