Downside pressure mitigated around EUR/USD – UOB

In opinion of FX Strategists at UOB Group, the pair remains neutral for the time being and could attempt a test of the upper end of the 1.1550/1.1750 range.

Key Quotes

24-hour view: “We highlighted yesterday that “further upward extension to 1.1700 would not be surprising” but added “the next resistance at 1.1720 is unlikely to come into the picture”. In line with expectation, EUR rose and touched a high of 1.1713 before easing off to end the day on a firm note. While upward momentum is not exactly strong, there is no sign of weakness just yet and the immediate risk is still tilted to the upside. Unless there is a break back below 1.1655 (minor support at 1.1680), EUR is expected to grind higher towards the next resistance at 1.1750 (minor resistance is at 1.1720). At this stage, the prospect for a sustained gain above 1.1750 is not high”.

Next 1-3 weeks: “We highlighted yesterday (25 Jun, spot at 1.1660) that the recent downward pressure has eased and the positive bias suggests that EUR is more likely to test the top of the expected 1.1550/1.1750 consolidation range first. EUR subsequently touched a high of 1.1713 and closed higher for the third straight day. Upward momentum has improved quickly with the rapid pace of advance and from here, 1.1750 may not be strong enough to contain EUR strength. A break of 1.1750 could potentially lead to further rapid rise in EUR as the next significant resistance is another 100 pips higher at 1.1850 (the high seen on the day of ECB’s meeting). All in, we expect EUR to stay underpinned from here unless there is a dip below the ‘key support’ at 1.1605″.