UOB Group’s FX Strategists see the recovery in EUR/USD could re-visit the mid-1.1900s in the next weeks.
24-hour view: “We highlighted yesterday that ‘strong upward momentum may ‘override’ the current overbought conditions even though a sustained rise above 1.1915 is unlikely’. Our view was not wrong as EUR rose to 1.1914 before retreating. Conditions remain overbought and this coupled with waning momentum suggests EUR is unlikely to strengthen further. For today, EUR is more likely to trade sideways between 1.1845 and 1.1900.”
Next 1-3 weeks: “We noted yesterday (06 Apr, spot at 1.1815) that EUR ‘is in a corrective rebound’. We highlighted that ‘in view of the nascent build-up in momentum, any EUR strength is likely limited to 1.1870 for now’. While our expectation for a stronger EUR is correct, the pace of advance has been more rapid than expected (EUR rose to 1.1877 during NY hours). In other words, the rebound in EUR could extend further. The next major resistance is at 1.1945. Overall, EUR is expected to trade with a positive bias as long as it does not move below 1.1770 (‘strong support’ level has moved higher from yesterday’s level of 1.1745). On a shorter-term note, 1.1820 is already quite a strong level.”