FX Strategists at UOB Group believe EUR/USD could extend the side-lined fashion in the next weeks.
Key Quotes
24-hour view: “We highlighted last Friday that EUR ‘could move below 1.0750 but it is left to be seen if it can maintain a toehold below this strong support level’. We added, ‘the next support is at 1.0720’. While our view was not wrong, the rapid and robust rebound from a low of 1.0725 was not exactly expected (EUR rose to 1.0829 during late NY hours on Friday). The 1.0725 low is deemed as a short-term bottom. The current rebound has room to extend higher but for today, a sustained break of 1.0855 is unlikely (next resistance is at 1.0890). Support is at 1.0775 followed by 1.0740.”
Next 1-3 weeks: “We have held the same view since last Thursday (16 Apr, spot at 1.0890) wherein ‘the outlook is mixed’ and EUR could ‘continue to trade in an undecided manner within a broad 1.0750/1.1000 range for a period’. After several days of ‘trading sideways, EUR is approaching the bottom of the range as it dropped to 1.0754 (23 Apr). Downward momentum has improved, albeit not by much. While the near-term bias is tilted to the downside, we prefer to wait for an added confirmation of a NY closing below 1.0720 before anticipating EUR weakness towards the March’s low of 1.0635. For now, the probability for such a scenario is not high but it would increase quickly unless EUR can move and stay above 1.0855 within these few days.”
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