Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group suggest EUR/USD could ace some consolidation in the near term.
Key Quotes
24-Hour View: The strong bounce that sent the EUR to a high of 1.1041 last Friday was surprising (we were expecting it to trade in a range). A quick advance has scope to test 1.1045 before risks of a more sustained pullback escalate. Major resistance at 1.1100 is not expected to come under threat. On the downside, if the EUR breaks below 1.0955 (minor support at 1.0975), it will mean that the current upside pressure has subsided.
Next 1-3 weeks: After EUR dropped to 1.0910, in our latest narrative from last Thursday (03 Aug, spot at 1.0940), we held the view that EUR could weaken further to 1.0865. On Friday, EUR rebounded strongly and took out our ‘strong resistance’ level of 1.1020. The breach of the ‘strong resistance’ level means that the EUR weakness that started more than a week ago has stabilised. For the time being, we expect EUR to trade in a range, likely between 1.0920 and 1.1100.
