There is potential for Euro (EUR) to rise above 1.1765 against US Dollar (USD); overbought conditions suggest it might not be able to hold above this level. In the longer run, price action indicates further EUR strength, likely toward 1.1795, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Price action indicates further EUR strength
24-HOUR VIEW: “Our view of consolidation yesterday was incorrect, as EUR rose sharply for the second straight day, reaching a high of 1.1760. While there is potential for EUR to rise above 1.1765 today, overbought conditions suggest it might not be able to hold above this level. The next resistance at 1.1795 is also unlikely to come under threat. To sustain the overbought momentum, EUR must hold above 1.1700, with minor support at 1.1720.”
1-3 WEEKS VIEW: “We revised our view to neutral last Thursday (17 Jul, spot at 1.1630). We expected EUR to ‘consolidate in a range of 1.1550/1.1720 for the time being.’ After EUR rose to a high of 1.1716, we highlighted the following yesterday (22 Jul, spot at 1.1690): ‘Although there has been an increase in upward momentum, it is not strong enough to suggest a sustained rise just yet. EUR must close above 1.1720 before a move to 1.1765 can be expected. The chance of EUR closing above 1.1720 will remain intact as long as EUR holds above the ‘strong support’ level, now at 1.1620, in the next few days.’ We underestimated the buildup in momentum, as EUR subsequently soared, almost reaching 1.1765 (high of 1.1760). The price action indicates further EUR strength, likely toward 1.1795. On the downside, the ‘strong support’ level is now at 1.1655 instead of 1.1620.”
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