The pair keeps the neutral stance and is viewed extending the rangebound theme in the next weeks, according to FX Strategists at UOB Group.
24-hour view: “We expected a lower EUR yesterday but were of the view that “1.1690 is likely out of reach”. However, EUR only managed to eke out a ‘fresh low’ of 1.1723 (below Tuesday’s low of 1.1731) before staging a sharp and robust recovery. The up-move appears to have scope to extend higher but any further advance is expected to face solid resistance at last week’s top of 1.1840 (next resistance is at 1.1870). On the downside, support is at 1.1770 followed by 1.1740. The 1.1723 low is not expected to come into the picture for today”.
Next 1-3 weeks: “We have held the same view since last Thursday (07 Jun, spot at 1.1775) that “a stronger corrective rebound to 1.1900 is not ruled out”. Since then, EUR has been trading sideways, holding roughly between 1.1725 and 1.1840. While the mild upward pressure has eased somewhat, we still see chance for a stronger recovery as long as the ‘key support’ at 1.1690 is intact. That said, EUR has to start moving higher within these few days as a prolonged consolidation around these levels would lead to a rapid loss in upward pressure. Looking ahead, a breach of 1.1690 would not change the current neutral outlook but indicate that EUR would continue to trade sideways within a broad range”.
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