FX Strategists at UOB Group keep the positive view on EUR/USD and see the next resistance at 1.1110.
Key Quotes
24-hour view: “We expected EUR to strengthen yesterday but held the view “any advance is likely limited to a test of 1.1060″. EUR retreated after touching 1.1059 during Asian hours before soaring back up to a high of 1.1085 during NY hours. Upward momentum has picked up strongly and further EUR gains appear likely. That said, any further EUR strength is expected to encounter solid resistance near last month’s peak at 1.1110 (next resistance is at 1.1135). Support is at 1.1045 but only a move below 1.1020 would indicate the current upward pressure has eased”.
Next 1-3 weeks: “Our narrative from Monday (14 Oct, spot at 1.1025) wherein “only a NY closing above 1.1050 would suggest EUR is ready for 1.1110″ finally came into fruition (NY closed at 1.1070). That said, our resolve was tested as we indicated yesterday (16 Oct, spot at 1.1030) that the “probability for a NY closing above 1.1050 within these 1 to 2 days is slightly less than even”. Upward momentum has improved considerably and from here, a break of 1.1110 would not be surprising. However, note that the next resistance at 1.1165 is a significant mid to long-term level as it is not only the minor peak in late August but is also close to a weekly declining trend line connecting the Mar 18 peak of 1.2476 and the Jun 19 peak of 1.1412 (line not visible in the chart below). All in, our positive EUR view from last week remains intact as long as 1.1000 (‘strong support’ level was previously at 1.0970) is not taken out”.
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