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FX Strategists at UOB Group suggested EUR/USD faces sustainable gains above the 1.2265 level in the near-term.

Key Quotes

24-hour view: “The rapid recovery in EUR came as a surprise (we were expecting EUR to test the support at 1.2145). Despite the relatively strong rebound, upward momentum has not improved by much. However, there is room for EUR to move above the major resistance at 1.2245 but a sustained advance above this level is unlikely. The next resistance is at 1.2265. On the downside, a breach of 1.2180 would indicate that the current mild upward pressure has eased (minor support is at 1.2200).”

Next 1-3 weeks: “Yesterday (20 May, spot at 1.2170), we held the view that the recent EUR strength has ended and we expected EUR to ‘trade within a 1.2095/1.2245 range’. While EUR is still trading within the range, we did not quite expect the subsequent strong rebound (EUR rose to 1.2229 during NY session). That said, it is too soon to expect the start of a fresh EUR up-leg. EUR has to close above 1.2265 before a sustained advance can be expected. At this stage, the prospect for EUR to move clearly above 1.2265 is not high but it would remain intact as long as it does not move below 1.2145 within these few days.”

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