FX Strategists at UOB Group noted the bearish phase in the pair has ended and it could now move to the upper bound of the 1.1330/1.1490 range in the next weeks.
Key Quotes
24-hour view: “EUR failed to break the major 1.1300 level (low of 1.1304) before making a sharp and sudden reversal that hit an overnight high of 1.1424. The sudden and strong surge appears to be running ahead of itself but there is scope for EUR to test 1.1450 first before the rally should ease off (next resistance is at 1.1485). Support is at 1.1380 but only a break of 1.1355 would indicate that a short-term top is in place”.
Next 1-3 weeks: “We highlighted on Wednesday (31 Oct, spot at 1.1345), “we are near an ‘inflection’ point wherein the price action in the next couple of days would determine whether EUR would continue to head south in the coming days (and possibly weeks) or stabilize to consolidate and trade sideways”. The break of the 1.1400 ‘key resistance’ indicates that the ‘negative’ phase that started about 2 weeks ago has ended and we could finally change our narrative that “EUR is still weak, but prospect for a sustained break below the year-to-date low of 1.1297 is not that high”. From here, the 1.1299 low registered on Tuesday (31 Oct) is deemed as a short-term bottom and this level is expected to hold for the next couple of weeks. The current movement is viewed as the early stages of a sideway trading phase even though the immediate bias is for EUR to probe the top of the expected 1.1330/1.1490 consolidation range”.
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