EUR/USD: Sustained upside expected above 1.0050 – UOB
|Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group’s Global Economics & Markets Research suggest EUR/USD faces sustained gains once 1.0050 is cleared.
Key Quotes
24-hour view: “We highlighted last Friday (30 Sep, spot at 0.9825) that ‘the weakness in EUR has stabilized’ and we expected EUR to ‘consolidate and trade between 0.9630 and 0.9950’. Yesterday (04 Oct), EUR rocketed and gained a whopping 1.62% (NY close of 0.9983), its largest 1day advance since 2016. The breach of the 0.9950 resistance combined with the impulsive upward momentum has shifted the risk for EUR to the upside. That said, there is a significant and solid resistance at 1.0050 and EUR has to clear this hurdle before further sustained advance is likely. Overall, only a breach of the ‘strong support’ level, currently at 0.9835, would indicate that the upside risk for EUR has dissipated. “
Next 1-3 weeks: “Yesterday, we noted that ‘the underlying tone has firmed somewhat’ and while we expected EUR to edge higher, we held the view that ‘any advance is likely limited to a test of 0.9875’. In other words, we did not expect the outsized surge in EUR as it rocketed to a high of 0.9999. The sharp rally is deeply overbought but with no signs of easing just yet, further EUR strength is not ruled out. However, 1.0050 is a significant and solid resistance, and whether EUR can break through this level remains to be seen. Support is 0.9945 but only a breach of 0.9915 would indicate that the current strong upward pressure has subsided.”
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