There is scope for EUR to rally further – UOB Group

Strong momentum indicates there is scope for Euro (EUR) to rally further vs US Dollar (USD); the significant resistance at 1.0530 could be just out of reach. In the longer run, increase in momentum is not enough to suggest a sustained rise; EUR must first break and remain above 1.0530 before a move to 1.0570 can be expected, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Increase in momentum is not enough to suggest a sustained rise

24-HOUR VIEW: “Our view for EUR to ‘trade in a range between 1.0375 and 1.0435’ yesterday was incorrect. Instead of trading in a range, EUR surged, closing at 1.0486, sharply higher by 1.07%. While deeply overbought, strong momentum indicates there is scope for EUR to rally further. However, the significant resistance level at 1.0530 could be just out of reach. Note that there is another resistance at 1.0510. To sustain the overbought momentum, EUR must not break below 1.0440 (minor support is at 1.0465).”

1-3 WEEKS VIEW: “Our most recent narrative was from last Friday (28 Feb, spot at 1.0395), wherein EUR ‘could continue to decline, but it is currently unclear whether the significant support at 1.0330 is within reach.’ Yesterday (Monday), we pointed out that ‘Our view remains unchanged, but the ‘strong resistance’ level has moved lower to 1.0455 from 1.0470.’ EUR not only broke above our ‘strong resistance’ level but also soared to a high of 1.0503. Upward momentum has increased, though not enough to suggest a sustained rise. EUR must break and remain above the significant resistance at 1.0530 before a move to 1.0570 can be expected. The odds of EUR breaking clearly above 1.0530 will remain intact as long as 1.0415 (‘strong support’ level) is not breached.”