FX Strategists at UOB Group noted further gains are expected in EUR/USD once the 1.2000/10 band is cleared.
24-hour view: “We expected EUR to ‘trade sideways between 1.1935 and 1.1985’ last Friday. However, EUR traded within a higher range than expected (1.1949/1.1994). Further sideway-trading would not be surprising even though the weakened underlying tone suggests a lower trading range of 1.1935/1.1985.”
Next 1-3 weeks: “Our latest narrative was from last Thursday (15 Apr, spot at 1.1980) where we highlighted that ‘overbought shorter-term conditions could slow the pace of advance but a break of 1.2010 would not be surprising’. However, 1.2010 remains intact as EUR struggled to move above 1.2000 for the past couple of days. Conditions remain overbought and upward momentum is beginning to wane. Unless EUR breaks clearly above 1.2000/1.2010 within these couple of days, the chance or further EUR strength would diminish quickly. Conversely, a breach of 1.1915 (no change in ‘strong support’ level) would indicate that the EUR strength that started about 2 weeks ago has come to an end.”