In opinion of FX Strategists at UOB Group, the pair could attempt a test of the 1.1900 handle in the near term.
Key Quotes
24-hour view: “We anticipated a higher EUR yesterday but were of the view that “a clear break above the next resistance at 1.1780 is not expected”. However, comments from ECB officials sent EUR surging to a high of 1.1796. The rally appears to be running ahead of itself and while an intraday move above 1.1800 would not be surprising, the next major resistance at 1.1830 is unlikely to be challenged. Support is at 1.1750 but only a break back below 1.1730 would indicate that a short-term top is in place”.
Next 1-3 weeks: “We shifted from bearish to neutral on EUR on Tuesday (05 Jun, spot at 1.1700) and were of the view that EUR has moved into a consolidation phase. While we noted the “near-term bias is tilted to the upside”, we added “any advance is viewed as part of a 1.1600/1.1830 consolidation range”. The sharp and rapid advance in EUR yesterday was unexpected and in view of the vastly improved momentum outlook, 1.1830 is unlikely to be strong enough to cap the current EUR strength. In other words, we have to contend with a ‘stronger corrective rebound’ and a move to 1.1900 is not ruled out in the days ahead. On the downside, support is at 1.1730 but only a move below 1.1690 (‘key support’ level) would indicate that the current upward pressure has eased”.
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