EUR/USD neutral short term, points to further consolidation – UOB

FX Strategists at UOB Group noted the pair sticks to its neutral stance and has moved into a consolidative theme.

Key Quotes

24-hour view: “We expected the rebound in EUR “to test the 1.1645/50 resistance” last Friday but indicated that “a move beyond the next resistance at 1.1680 is not expected”. EUR subsequently hit a high of 1.1675 before ending the day of on a firm note (NY close of 1.1656). The undertone has improved and from here, further extension to 1.1700 would not be surprising. That said, the next resistance at 1.1720 is unlikely to come into the picture, at least not for today. On the downside, only a move back below 1.1605 would indicate that the current upward pressure has eased (minor support is at 1.1630)”.

Next 1-3 weeks: “Our recent view that EUR “is not ready to reenter a bearish phase just yet” was proven right as it staged a strong up-move last Friday and hit a high of 1.1675. While this level was just below the ‘key resistance’ at 1.1680, the subsequent strong daily closing is enough to indicate that the recent downward pressure has eased. However, there is no change to the neutral outlook but EUR has likely moved into a consolidation range and is expected to trade sideways within a 1.1550/1.1750. On a shorter-term note, the positive bias suggests that EUR is more likely to test the top end of the range first”.