EUR/USD keeps the constructive bias so far – UOB

FX Strategists at UOB Group expect EUR/USD to trade on a positive mood in the near-term.

Key Quotes

24-hour view: “Yesterday, we highlighted that EUR ‘could test the major resistance at 1.1380 first before the current upward pressure should ease’. We added, ‘the next resistance is at 1.1405’. In other words, we did not anticipate the sudden surge in momentum as EUR soared to an overnight high of 1.1408 before extending its gains this morning. Upward momentum remains robust and from here, a break of the June’s peak of 1.1422 would not be surprising. In view of the overbought conditions, the next resistance at 1.1460 could be just out of reach. Support is at 1.1390 followed by 1.1365.”

Next 1-3 weeks: “While we noted yesterday (14 Jul, spot at 1.1345) that ‘if EUR closes above 1.1380 within these few days, a break of the June’s peak of 1.1422 would not be surprising’, we held the view that ‘the prospect for such a scenario is not high’. However, EUR soared to a high of 1.1408, closed on a strong note at 1.1396 (up by +0.49%) before extending its advance after NY close. Rapid pick-up in momentum suggests EUR could continue to advance towards the year-to-date high at 1.1492 even though the current momentum may not be enough to carry EUR above this major level. Overall, EUR is expected to trade with a positive note as long as it does not move below 1.1320 (‘strong support’ level).”