FX Strategists at UOB Group remain bullish on the pair, although a test of 1.1300 seems to have runout of momentum in the near term.
Key Quotes
“The ‘extension’ target indicated at 1.1235/40 yesterday was exceeded as EUR surged to a high of 1.1263. The up-move appears to be over-stretched but a retest of 1.1260/65 would not be surprising. That said, the next level at 1.1300 is a major resistance (high in November last year) and is unlikely to be challenged for now. Support is at 1.1195 ahead of yesterday’s low near 1.1160”.
“Merkel’s ‘EUR is too weak’ comment boosted EUR to a high of 1.1263. While this has improved the upward momentum, the bullish phase that started last Wednesday, 17 May still appears to be over-extended and the extension target of 1.1300 may not be seen so soon. We have suggested taking partial profit at 1.1170 last Friday and remaining longs should adjust the stop-loss higher to 1.1130 from 1.1095 yesterday. Looking further ahead, any break above 1.1300 would shift the focus to 1.1365”.
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