In opinion of FX Strategists at UOB Group, EUR/USD could now attempt to visit the mid-1.1100s in the next weeks.
Key Quotes
24-hour view: “We expected EUR to ‘ratchet higher’ yesterday but were of the view that it ‘is unlikely to break 1.1050’. The subsequent rapid and sharp rise that sent EUR to an overnight high of 1.1093 came as a surprise. The swift advance is in overbought territory, but EUR could have enough fuel in its tank for a push above 1.1100. For today, a break of the late-March peak near 1.1145 would come as a surprise (there is another resistance at 1.1120). On the downside, a breach of 1.1020 would indicate that the rally in EUR over the past few days is ready to take a break (minor support is at 1.1045).”
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.”
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