FX Strategists at UOB Group noted the upside momentum in EUR/USD could lose traction on a breach of 1.1830.
Key Quotes
24-hour view: “Yesterday, we held the view that ‘there is room for EUR to edge above 1.1965 but barring a clear break of 1.2000, the prospect for a pullback would increase quickly’. However, EUR popped to a high of 1.2011 first before pulling back sharply back to an overnight low of 1.1899. Upward pressure has more or less dissipated and EUR has likely moved into a consolidation phase. For today, EUR is likely to trade sideways, expected to be within a 1.1875/1.1975 range.”
Next 1-3 weeks: “On Monday (31 Aug, spot at 1.1915), we highlighted that EUR ‘is expected to trade with an upward bias towards the major resistance at 1.2000’. We added, ‘for now, the odds for a sustained rise above this level are not high’. The quick pop in EUR to a high of 1.2011 yesterday (01 Sep) and the subsequent rapid retreat is in line with our expectation. While it is too early to expect a short-term top, upward momentum has been ‘sluggish’ and EUR has to move and stay above 1.1975 within these couple of days or a break of 1.1830 (‘strong support’ level was previously at 1.1815) would indicate that the current upward pressure has eased. Looking forward, the next resistance above 1.2010 is at 1.2050.”
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