The continuation of the upside momentum could now push EUR/USD to the 1.0945 level in the next few weeks, note Markets Strategist Quek Ser Leang and Economist Lee Sue Ann at UOB Group.
Key Quotes
24-hour view: After EUR rebounded from 1.0663 on Monday, we highlighted yesterday that “the rebound is likely to continue but is unlikely to breach the major resistance at 1.0750.” However, in NY trade, EUR blew past 1.0750 and rocketed to 1.0887. EUR ended the day higher by a whopping 1.70%, its largest 1-day gain in a year. Further advance is not ruled out; in view of the severely overbought conditions, the major resistance at 1.0945 is unlikely to come into view today (there is another resistance at 1.0915). Any pullback is likely to stay above 1.0810 (minor support is at 1.0845).
Next 1-3 weeks: Last Friday (10 Nov, spot at 1.0665), we highlighted that the outlook for EUR is neutral, and we expected it to trade sideways in a range of 1.0580/1.0750. The manner in which EUR jumped above 1.0750 yesterday and accelerated to 1.0887 clearly indicates that it has moved out of the sideways trading range. While the outsized 1.70% rise appears to be overstretched, further EUR strength appears likely. The level to monitor is 1.0945. Overall, only a breach of the ‘strong support’ (level is currently at 1.0770) would indicate that EUR is not strengthening further. The ‘strong support’ level is set to rise in the coming days
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