FX Strategists at UOB Group suggested EUR/USD could attempt some consolidation in the near term albeit with an upside bias.
24-hour view: “EUR plunged to 1.0925 yesterday, just one pip above the early September low of 1.0924 before rocketing back up to end the day higher by +0.47% (1.1061). While the sudden surge higher appears to be running ahead of itself, there is scope for EUR to move above the strong 1.1085 resistance (this level was tested overnight and last week). For today, 1.1110 is likely out of reach. Support is at 1.1020 followed by 1.0990”.
Next 1-3 weeks: “While we highlighted yesterday the “risk of a retest of the early Sep low of 1.0924 has increased”, we did not expect the level to be tested within hours as EUR crashed to 1.0925 (after ECB) before surging back up to a high of 1.1086 during late NY hours. The outsized 1-day range of 161 pips (second largest 1-day range in 2019) has clouded the near-term outlook. For now, we expect EUR to trade sideways within a broad 1.0925/1.1130 range. If the short-term volatility were to ease in the next few days, the expected range would be narrowed. Looking ahead, the ‘failure’ to crack 1.0924 coupled with the sharp upswing suggests the bias is tilted to the upside. That said, EUR has to move clearly above 1.1130 before a sustained advance can be expected”.
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