Further upside could encourage EUR/USD to a test the 1.0630 region in the next few weeks, suggest UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: Yesterday, we expected EUR to trade sideways between 1.0470 and 1.0535. However, EUR rose to a high of 1.0551 before closing on a firm note at 1.0548 ( 0.43%). While upward momentum has not increased by much, EUR could rise further to 1.0595. The major resistance at 1.0630 is highly unlikely to come into view. On the downside, if EUR breaks below 1.0505 (minor support is at 1.0520), it would indicate that the current upward pressure has eased. 

Next 1-3 weeks: On Tuesday (03 Oct, spot at 1.0480), we highlighted that EUR “is still in a bearish phase, and it is likely to weaken to 1.0430, potentially below 1.0400.” EUR then dropped to 1.0547 and rebounded. Yesterday (05 Oct, spot at 1.0505), we noted that “downward momentum is beginning to slow.” We highlighted that if EUR “breaks above 1.0545, it would mean that 1.0530 is not coming into view this time around.” In NY trade, EUR broke above 1.0545 and reached 1.0551. The current price action is likely part of a rebound that could extend to 1.0630, but unlikely to break clearly above this level. The mild upward pressure is intact as long as EUR stays above 1.0460.