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FX Strategists at UOB Group remain constructive on EUR/USD and expect a potential test of the 1.1150 region in the next weeks.

Key Quotes

24-hour view: “We highlighted last Friday that ‘the swift advance is in overbought territory but EUR could have enough fuel in its tank for a push above 1.1100’. We added, ‘a break of the late-March peak near 1.1145 would come as a surprise’. Our view was not wrong as EUR eased off after touching 1.1144. Conditions remain overbought but the current EUR strength appears to be tenacious and from here, EUR could edge above 1.1145. That said, EUR is unlikely able to maintain a toe-hold above this level (next resistance is at 1.1190). Support is at 1.1095 but the stronger level is at 1.1070.”

Next 1-3 weeks: “On Wednesday (27 May, spot at 1.0970), we highlighted that the ‘outlook for EUR is mildly positive’. We added, EUR ‘has to close above 1.1020 before a more sustained advance can be expected’. While our positive view for EUR was not wrong, we did not expect the sudden upward acceleration that sent to a high of 1.1093 yesterday (28 May). From here, the outlook is clearly still positive but the strong boost in momentum suggests EUR could continue to advance towards the late-March peak near 1.1145. To look at it another way, instead of mildly positive, the current outlook for EUR is clearly positive. Only a breach of 1.0980 (‘strong support’ previously at 1.0900) would indicate that the current upward pressure has eased.”