EUR/USD risks a reversal near term – UOB
UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang suggest the loss of 1.0900 should remove strength from EUR/USD to revisit 1.1050.
Key Quotes
24-hour view: We expected EUR to break above 1.1000 yesterday. However, we indicated, “the next major resistance at 1.1050 is likely out of reach”. While EUR broke above 1.1000, the advance was brief as it pulled back sharply from 1.1011. The pullback in overbought conditions suggest EUR is unlikely to advance further. Today, EUR is more likely to trade in a range between 1.0925 and 1.0985.
Next 1-3 weeks: After EUR soared to a high of 1.0990, we indicated yesterday (22 Jun, spot at 1.0985) that the ‘rejuvenated’ momentum indicates there is room for EUR to head higher to 1.1050. While EUR subsequently rose to a fresh 6-week high of 1.1011, it then pulled back sharply. In view of the overbought conditions, the current EUR strength could not afford to pause, or the risk of a reversal will increase rapidly. Note that the current EUR strength has moved into its second week now. All in all, only a breach of 1.0900 (no change in ‘strong support’ level from yesterday) would indicate that 1.1050 is not coming into view this time around.