Spot could now advance further and test the 1.1790 area in the next weeks, according to FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday that there is a scope for a higher EUR but added; “the next resistance at 1.1700 is unlikely to come into the picture”. However, EUR surged and touched a high of 1.1701 before ending the day on a strong note (NY close of 1.1688). While the rally appears to be running ahead of itself, there is scope for EUR to test the late-August peak near 1.1735 before it should settle down. On the downside, support is at 1.1665 followed by 1.1630. The 1.1606 low seen earlier yesterday is not expected to come into the picture”.
Next 1-3 weeks: “While we noted yesterday “the short-term downward pressure has eased” and expected EUR to “trade within a higher range”, the solid overnight gains were not exactly expected (EUR closed higher by +0.55%, the largest 1-day gain in 3 weeks). However, there is no change to the neutral outlook but the current short-term EUR strength could extend towards the July’s peak of 1.1790. At this stage, the probability for such a scenario is not high and only successive higher daily closings over the next few days would improve the odds for a move to 1.1790. On the downside, a break of 1.1605 is enough to indicate that current nascent build-up in momentum has fizzled out. Ideally, the minor support at 1.1630 should hold within the next couple of days
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