EUR/USD: Strong upward momentum shows no signs of slowing – UOB Group

Strong upward momentum shows no signs of slowing, but it is unclear if Euro (EUR) can break above 1.0665 today vs US Dollar (USD). In the longer run, impulsive rally suggests EUR is likely to break 1.0665; the next technical target lies at 1.0730, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note. 

Impulsive rally suggests EUR is likely to break 1.0665

24-HOUR VIEW: “After the strong surge in EUR on Monday, we indicated yesterday, Tuesday, that ‘while deeply overbought, strong momentum indicates there is scope for EUR to rally further.’ However, we pointed out, ‘the significant resistance level at 1.0530 could be just out of reach.’ EUR then broke the significant resistance level, which led to a sharp rally that sent it to a high of 1.0627. EUR closed higher by a whopping 1.32%, tagging on to the 1.07% gain from Monday. Such a sharp rally over a short period seems excessive, but the strong upward momentum shows no signs of slowing just yet. That said, it is unclear if there is enough momentum for EUR to break above the next resistance level at 1.0665 today. On the downside, any pullback is likely to hold above 1.0545 (minor support is at 1.0580).” 

1-3 WEEKS VIEW: “Although EUR rose and closed sharply higher two days ago, we indicated yesterday (04 Mar, spot at 1.0485) that ‘the increase in momentum is not enough to suggest a sustained rise.’ We highlighted that EUR ‘must break and remain above the significant resistance at 1.0530 before a move to 1.0570 can be expected.’ The subsequent price movements did not quite turn out as we expected, as EUR lifted off and rocketed, almost reaching the strong resistance level at 1.0630. The impulsive rally suggests EUR is likely to break 1.0665. The next technical target above 1.0665 lies at 1.0730. We will maintain our positive EUR view as long as 1.0480 (‘strong support’ level was at 1.0415 yesterday) is intact. The ‘strong support’ level is set to move higher over the next few days.”