EUR/USD could test 1.1700 on a breakout of 1.1620 – UOB

The pair could extend the march north to the 1.1700 area in case it breaks above 1.1620, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The anticipated strength in EUR exceeded our expectation as it took out the strong 1.1560 resistance and hit a high of 1.1593. The subsequent strong daily closing in NY (closed at 1.1593) suggests that the immediate pressure is still on the upside. That said, overbought condition could limit any gains to 1.1620 (there is another rather strong resistance at 1.1650). On the downside, only a break of 1.1540 would indicate that a short-term top is in place (minor support at 1.1570)”.

Next 1-3 weeks: “We highlighted on Wednesday (10 Oct, spot at 1.1500) that EUR is expected to “trade sideways to slightly higher” within a 1.1450/1.1620 consolidation range. We added yesterday (11 Oct, spot at 1.1525), “EUR appears more likely to move towards the top of the expected 1.1450/1.1620 consolidation range first”. While the overall price action has been in line with our expectation, the pace of the advance has been faster than anticipated as EUR surged by +0.65% yesterday, the largest 1-day gain in 3 weeks. From here, the prospect for a break of 1.1620 has increased and a clear breach of this level would suggest there is scope for further EUR strength towards 1.1700. All in, EUR is expected to stay underpinned in the coming days and only a break of the ‘key support’ at 1.1500 would indicate that a short-term top is in place”.