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FX Strategists at UOB Group expect EUR/USD to attempt some consolidation ahead of a probable move to 1.1239.

Key Quotes

24-hour view: “While our view for a higher EUR was correct, we underestimated the pace and extent of its rally as it surged to a high of 1.1185. The rapid and strong rise over the past few days is severely overbought and further sustained EUR strength is unlikely for today. EUR is more likely to consolidate and trade sideways at these elevated levels. Expected range for today, 1.1100/1.1190.”

Next 1-3 weeks: “We indicated yesterday (02 Mar, spot at 1.1040) that that ‘the rapid improvement in momentum suggests a move above 1.1096 would not be surprising and if EUR can register a NY closing above this level, it could continue to advance towards 1.1170’. The scenario was supposed to take a few days to evolve but EUR blast past 1.1096 and cracked 1.1170 with a few hours (overnight high of 1.1185). Now that 1.1170 is breached, the focus has shifted to the late December high of 1.1239. The prospect for a move to this level is not low but EUR is likely to take a breather and consolidate for a couple of days first before making a move towards 1.1239. On the downside, the ‘strong support’ level has moved higher to 1.1000 from yesterday’s level of 1.0940.”