EUR/USD: Likely to trade in a range of 1.1270/1.1435 for now – UOB Group

There is scope for the sharp rally to extend; deeply overbought conditions suggest any advance is likely part of a higher range of 1.1330/1.1415. In the longer run, increase in momentum is not enough to indicate a sustained advance; EUR is likely to trade in a range of 1.1270/1.1435 for now, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

There is scope for the sharp rally to extend

24-HOUR VIEW: "EUR plunged in the early Asian session yesterday. When EUR was at 1.1245, we highlighted that 'further weakness is not ruled out, but the sharp drop seems excessive, and it is unclear whether EUR can break and hold below 1.1200.' However, rather than weakening, EUR surged, reaching a high of 1.1384 in the late NY session. The sharp rally has scope to extend, but given the deeply overbought conditions, any advance is likely part of a higher range of 1.1330/1.1415. To put it another way, EUR is unlikely to break clearly above 1.1415."

1-3 WEEKS VIEW: "The following are excerpts from our update yesterday: 'To continue to decline, EUR must first close below 1.1200. The risk of EUR closing below 1.1200 will remain intact provided that the ‘strong resistance’ level, currently at 1.1355, is not breached.' EUR never threatened 1.1200 (low of 1.1209). Instead, it reversed all of its early Asian session selloff, surging to close at 1.1371 in NY, up 0.70%. Although the sharp rally has gathered some momentum, it is not enough to indicate a sustained advance just yet. To rise in a sustained manner, EUR must first break and hold above 1.1435. Meanwhile, we expect EUR to trade in a range of 1.1270/1.1435."