Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group note the upside momentum in EUR/USD seems to be gathering traction.

Key Quotes

24-hour view: Our view for EUR to trade in a range yesterday was incorrect, as it soared by 0.79% (NY close of 1.0781), its biggest 1-day advance in 2-1/2 months. Further EUR strength is not ruled out, but in view of the overbought conditions, it remains to be seen if it can maintain a foothold above 1.0800 (there is another nearby resistance at 1.0815). Support is at 1.0760, a break of 1.0740 would suggest the current upward pressure has eased.

Next 1-3 weeks: We highlighted yesterday (08 Jun, spot at 1.0705) that EUR “is likely to consolidate and trade between 1.0635 and 1.0785 for a while more”. We did not anticipate the sharp and rapid rise as EUR rose slightly above 1.0785 (high of 1.0786). Upward momentum is building, albeit tentatively. It is not clear for now whether EUR could rise to 1.0850. It is worth noting, there is a strong resistance zone between 1.0800 and 1.0815. Overall, as long as EUR stays above the ‘strong support’ level (now at 1.0730), upward momentum could continue to build in the next few days.