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EUR/USD carries the potential to extend the squeeze higher, although a test of 1.1250 looks unlikely, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We cautioned last Friday that “the quiet consolidation phase over the past few days appears to be close to ending”. EUR subsequently dipped to 1.1050 before surging above the strong 1.1115 resistance and touched 1.1153. While the rapid rise appears to be running ahead of itself, there is scope for EUR to extend its gains to 1.1180. For today, the next resistance at 1.1220 is likely out of reach. Support is at 1.1115 but the more significant support is at 1.1080″.

Next 1-3 weeks: “We have held the same view since last Monday (19 Aug, spot at 1.1095) wherein there is scope for EUR to “retest the early August low of 1.1025″. After touching a 3-week low of 1.1050 last Friday (23 Aug), EUR staged a surprisingly robust rebound and extended its gain upon opening this morning. The 1.1160 ‘key resistance’ appears to have been breached and the 1.1050 low is likely a short-term bottom. The current movement is viewed as a corrective rebound that has room to extend higher. That said, the month-to-date high near 1.1250 is a solid resistance and this level could be out of reach (1.1220 is already quite a strong level). On the downside, the 1.1050 low is acting as a strong support and only break of this level would indicate the current upward pressure has eased (shorter-term, 1.1080 is already quite a firm support level)”.