EUR/USD now points to further upside – UOB

In view of FX Strategists at UOB Group, the pair remains neutral although further gains are not ruled out.

Key Quotes

24-hour view: “While we noted the improved undertone in EUR yesterday, the sudden surge higher that blast past the strong 1.2420 resistance was unexpected. The subsequent strong daily closing suggests further upside risk but at this stage, a sustained move above the next strong resistance at 1.2500 seems unlikely. Support is at 1.2425 but only a break back below 1.2395 would indicate that the current upward pressure has eased”.

Next 1-3 weeks: “We highlighted yesterday (26 Mar, 1.2365) that the “recent mild downward pressure has eased” and that EUR is expected ‘to trade sideways between 1.2240 and 1.2450”. However, the subsequent rapid rise that hit an overnight high of 1.2462 was unexpected. The sharp up-move has shifted the immediate pressure to the upside and for the next few days, we expect EUR to stay underpinned. That said, it is too early to expect the start of a bullish phase even though a test of the year-to-date high of 1.2555 is a distinct possibility (with strong intervening resistance at 1.2500). Overall, we expect the current upward pressure to improve further as long as the key support at 1.2340 is not taken out. On a shorter-term note, 1.2395 is already a relatively strong support”.