EUR/USD: A test of 1.1000 emerges on the horizon – UOB

In the opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, EUR/USD faces sustained gains above 1.0955.

Key Quotes

24-hour view: After EUR rose sharply on Tuesday, we highlighted yesterday that "while overbought, the rapid rise could test 1.0915 before easing." We were of the view that "the major resistance at 1.0955 is highly unlikely to come under threat." We indicated that "support is at 1.0855, followed by 1.0835." EUR then dipped to 1.0853 in London trade before soaring to a high of 1.0945 in NY session. Conditions remain overbought, but there is no sign of easing just yet. Today, EUR could break above 1.0955. In view of the overbought conditions, it might not be able to hold above this level. If EUR breaks the next resistance at 1.1000 today, it would come as a surprise. Support is at 1.0905, followed by 1.0870.

Next 1-3 weeks: Yesterday (30 Aug, spot at 1.0870), we held the view that the recent weakness in EUR has stabilised. We expected EUR to trade with an upward bias, but we indicated that “it remains to be seen if it can break above 1.0955.” We did not quite expect EUR to rise quickly to 1.0945. Upward momentum has increased further, and if EUR breaks and holds above 1.0955, the next level to watch is 1.1000. At this stage, it is premature to expect the formidable resistance at 1.1045 to come into view. Overall, only a breach of 1.0835 (‘strong support’ level was at 1.0805 yesterday) would indicate that the current upward pressure has eased.