If EUR/USD clears the 1.0945 level, it could open the door to a potential test of the 1.1000 threshold in the next few weeks, suggest UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.
24-hour view: We expected EUR to trade in a range between 1.0820 and 1.0880 last Friday. However, after dipping to a low of 1.0823, EUR staged a surprisingly sharp bounce to a high of 1.0915. Further EUR strength appears likely, even though overbought conditions suggest that a sustained rise above 1.0945 is unlikely. The next major resistance at 1.1000 is also unlikely to come into view. Support is at 1.0885, followed by 1.0860.
Next 1-3 weeks: Last Wednesday (15 Nov, spot at 1.0880), we highlighted that “further EUR strength appears likely, and the level to monitor is 1.0945.” We also highlighted that “only a breach of 1.0770 (‘strong support’ level) would indicate that EUR is not strengthening further.” Last Friday, EUR soared to a high of 1.0915. We continue to expect EUR to strengthen. If it breaks above 1.0945, the next level to watch is 1.1000. On the downside, the ‘strong support’ level has moved higher to 1.0820.