EUR/USD: A clear break above 1.1290 is unlikely – UOB Group

Chance for Euro (EUR) to retest the 1.1290 level against the US Dollar (USD) before a more sustained pullback is likely; a clear break above this level is unlikely. In the longer run, increase in momentum is not sufficient to suggest a sustained advance; EUR must first break decisively above 1.1290, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Increase in momentum is not sufficient to suggest a sustained advance

24-HOUR VIEW: "We expected EUR to 'trade with an upward bias' yesterday. We pointed out that 'as momentum is not strong currently, any advance is likely limited to a test of 1.1225.' However, EUR surged past 1.1225 to reach 1.1288 before retreating to close at 1.1242 (+0.71%). The decline from the high has resulted in a slowdown in upward momentum, but there is a chance for a retest of the 1.1290 level before a more sustained pullback is likely. A clear break above 1.1290 appears unlikely. On the downside, should EUR break below 1.1195 (minor support is at 1.1215), it would suggest that it is more likely to trade in a range instead of retesting 1.1290."

1-3 WEEKS VIEW: "Our latest narrative was from last Thursday (15 May, spot at 1.1180), wherein EUR 'has likely entered a consolidation phase, and it is likely to trade between 1.1100 and 1.1290 for the time being.' After range trading for a few days, EUR rose and reached 1.1288 yesterday. The increase in momentum is not sufficient to suggest a sustained advance. EUR must first break decisively above 1.1290 before a move to 1.1330 can be expected. Currently, the chance of EUR breaking clearly above 1.1290 is not high, but it could grow in the next few days as long as 1.1165 is not breached."