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Quek Ser Leang at UOB Group’s Global Economics & Markets Research noted occasional bearish attempts in EUR/USD are expected to meet solid support at the 1.1985 level.

Key Quotes

“In the FX Technical section of our Quarterly Global Outlook published on 19 Mar 2021 (when EUR/USD was trading at 1.1970), we highlighted that “bias for EUR/USD is on the downside but any weakness is expected to encounter solid support at 1.1740 (55-week exponential moving average)”. We added, EUR “could dip below this solid support but the prospect for a move to the November 2020 low of 1.1602 is not high.”

EUR/USD subsequently dipped to 1.1702 in early April before rebounding. While the rebound broke above February’s high of 1.2242, it failed to move clearly above the next resistance at 1.2265 (EUR/USD touched 1.2266 last week). Weekly MACD has just turned positive but the failure to clear 1.2265 coupled with the pullback that breached the rising trend-line support on the daily chart last Friday (28 May) indicates that the odds for EUR/USD to move above the year-to-date top near 1.2350 within these couple of months are not high.”

“The near-term bias is tilted to the downside (daily MACD is weakening) but any decline is unlikely to threaten the major support zone near 1.1850 (rising trend-line and 55-week exponential moving average). On a shorter-term note, May’s low near 1.1985 is already a strong support level. To look at it another way, EUR/USD could edge lower within these 1 to 2 months before making an attempt to advance towards 1.2350 at a later stage.”