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FX Strategists at UOB Group believe EUR/USD is posed for further advances, although the 1.1096 level remains a strong barrier for the time being.

Key Quotes

24-hour view: “While our expectation for EUR to strengthen yesterday was correct, the sudden and powerful surge that blew past several resistance levels with ease came as a surprise (EUR posted a huge gain of +1.03%, the largest 1-day advance in 13 months). The rapid rise appears to be running ahead of itself but impulsive momentum suggests further EUR strength would not be surprising. From here, barring a move below 1.0960, EUR is expected to continue to advance (albeit at a slower pace) towards 1.1040. The next resistance level of note is at the late Jan peak at 1.1096.”

Next 1-3 weeks: “We detected the bottom in EUR relatively early when we indicated on Monday (24 Feb, spot at 1.0835) that the ‘weak phase has ended’. We subsequently noted the improvement in upward momentum and highlighted on Wednesday (26 Feb, spot at 1.0875) that ‘if EUR were to register a NY closing above 1.0925, it would indicate the start of a stronger rebound towards 1.0980’. The scenario is expected to take at least several days to evolve but EUR cracked 1.0925 yesterday and within several hours, it took out 1.0980 as well (high of 1.1005). The +1.09% gain yesterday was the largest 1-day advance in 13 months. While the risk from here is for further EUR strength, it is left to be seen if EUR possesses enough momentum to challenge the late January peak of 1.1096. Overall, the current upward pressure in EUR is deemed as intact as long as 1.0920 (‘strong support’ level) is not taken out.”