EUR/USD now focused on 1.1980 – UOB

FX Strategists at UOB Group expect further gains in EUR/USD as long as it trades above the 1.1980 level in the next couple of days.

Key Quotes

24-hour view: “We highlighted yesterday that ‘upward momentum is strong and EUR is likely to continue to advance’. We added, ‘the year-to-date high at 1.2011 could be out of reach’. While our view was not wrong as EUR rose to an overnight high of 1.2003, the subsequent sharp selloff that sent it tumbling to a low of 1.1922 came as a surprise. The rapid loss in momentum suggests that the 1.2003 high is a short-term top and this level is not expected to come into the picture for today. Overall, EUR is likely to consolidate and trade between 1.1900 and 1.1980.”

Next 1-3 weeks: “Yesterday, we indicated that ‘a break of 1.1980 would shift the focus to the year-to-date high at 1.2011’. While EUR strengthened as expected, the sharp sell-off from an overnight high of 1.2003 has dented the upward momentum considerably. The odds for further EUR strength have diminished unless EUR can move and stay above 1.1980 within these 1 to 2 days. Otherwise, a break of 1.1900 (no change in ‘strong support’ level) would indicate that 1.2003 is a short-term top and EUR could trade sideways for a period of time.”