EUR/USD: Likely to trade in a 1.0560/1.0610 range

Instead of continuing to rise, the Euro (EUR) is likely to trade in a 1.0560/1.0610 range. In the longer run, Downward momentum is beginning to fade; a break of 1.0610 would indicate that EUR has entered a consolidation phase, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Downward momentum is beginning to fade

24-HOUR VIEW: “After EUR traded in a range last Friday, we indicated yesterday (Monday) that ‘There has been no increase in either downward or upward momentum, and we continue to expect EUR to trade in a range, probably between 1.0505 and 1.0585.’ We did not anticipate the rebound that sent EUR to a high of 1.0607. EUR closed on a firm note at 1.0599 (+0.55%). The rebound appears to be running ahead of itself, and instead of continuing to rise, EUR is likely to trade in a 1.0560/1.0610 range today.”

1-3 WEEKS VIEW: “We turned negative in EUR on 07 Nov, when EUR was at 1.0730. After EUR fell below our technical target of 1.0500, we indicated last Friday (15 Nov, spot at 1.0525) that ‘The price action continues to suggest EUR weakness, even though caution is warranted given the deeply oversold conditions.’ We added, ‘The next support is at last year’s low, near 1.0450.’ Yesterday, EUR rebounded strongly, reaching a high of 1.0607. Downward momentum is beginning to fade, and a clear break of 1.0610 (no change in ‘strong resistance’ level) would indicate that EUR has entered a consolidation phase.”

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