FX Strategists at UOB Group have shifted their outlook on spot to neutral from bearish, allowing at the same time a probable test of the 1.1630 region.
Key Quotes
24-hour view: “We highlighted yesterday that “a break of the strong 1.1460 resistance is not ruled out but 1.1500 is not expected to come into the picture”. In line with expectation, EUR rose to a high of 1.1485 before settling at 1.1480. The strong daily closing suggests further upward pressure but indicators are entering overbought territory and we do not anticipate a break above the major 1.1560 resistance (1.1530 is already a rather strong level). Support is at 1.1455 but the stronger level is closer to 1.1420″.
Next 1-3 weeks: “We highlighted yesterday (20 Aug, spot at 1.1435) that “the bearish phase appears to be close to ending” and the break of 1.1460 indicates that the outlook for EUR has shifted to neutral. As highlighted yesterday, it is too early to expect a major bullish reversal even though the gain made by EUR over the past few days has been more ‘robust’ than expected. While the outlook is deemed as neutral, the immediate bias is on the upside and we see chance for EUR to test the major 1.1630 resistance. That said, it could take several days before this level would come into the picture. On the downside, only a break below the current ‘key support’ at 1.1420 would indicate that the prevalent upward pressure has eased”.
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