Rejuvenated momentum suggests the Euro (EUR) may continue to strengthen, according to UOB Group FX analysts Quek Ser Leang and Lee Sue Ann. While the EUR could test the significant resistance zone between 1.0970 and 1.0980, it is unlikely to break through it clearly.
Upward Momentum Indicates Further EUR Strength
24-HOUR VIEW: “Our expectation for the EUR to trade within a range yesterday was incorrect. Instead, the EUR surged, reaching a high of 1.0947 before closing at 1.0937, up by 0.37%. The sharp advance has resulted in overbought conditions. However, as long as the EUR does not breach 1.0910, with minor support at 1.0925, it could test but is unlikely to break clearly above the significant resistance zone between 1.0970 and 1.0980.”
1-3 WEEKS VIEW: “In our recent analysis from July 16, when the EUR was at 1.0895, we noted that ‘while there is still scope for the EUR to rise further, upward momentum is slowing, and it remains to be seen if any further advance can reach 1.0940.’ We also mentioned that ‘a breach of 1.0850 would indicate that the EUR strength from early this month has run its course.’ Yesterday, the EUR broke above 1.0940, reaching a high of 1.0947. The rejuvenated upward momentum suggests further EUR strength, although the 1.0970/1.0980 zone is expected to pose significant resistance. On the downside, the ‘strong support’ level has moved higher to 1.0885 from 1.0850.”
The EUR’s recent surge and the analysis by UOB Group’s FX analysts indicate a continued bullish trend, but significant resistance levels may limit further gains in the short term.
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