EUR/USD: UPSIDE MOMENTUM ALLEVIATED BELOW 1.0940 – UOB

Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group suggest further gains in EUR/USD remain on the cards above 1.0940 in the near term.

24-hour view: “We expected EUR to ‘advance further’ last Friday but we were of the view that ‘the next significant resistance at 1.1120 is likely out of reach for today’. We noted, there was a minor resistance at 1.1080. However, EUR only eked out a fresh high of 1.1075 and then tumbled to end the day lower by -0.40% (1.1000). While there is scope for EUR to drop further, any weakness is viewed as part of a 1.0940/1.1045 range. To put it another way, a clear break below 1.0940 is unlikely.”

Next 1-3 weeks: “Last Friday (14 Apr, spot at 1.1040), we highlighted that EUR ‘is likely to continue to head higher’ and ‘the next level to aim for is 1.1120, followed by 1.1160’. We did not expect the sharp pullback to 1.0971. While upward momentum is beginning to fade, only a breach 1.0940 (no change in ‘strong support’ level) would indicate that EUR is not strengthening further.”