FX Strategists at UOB Group Quek Ser Leang and Lee Sue Ann suggest EUR/USD now faces some consolidation between 0.9900 and 1.0085.

Key Quotes

24-hour view: “Our expectations for EUR to ‘dip below 0.9900’ yesterday were incorrect as it rebounded strongly from 0.9912 (high has been 1.0028). Despite the robust rebound, upward momentum has not improved by much. That said, there is room for EUR to edge higher from here even though any advance is likely limited to a test of 1.0035. The major resistance at 1.0085 is not expected to come under threat. On the downside, a breach of 0.9955 (minor support is at 0.9975) would indicate that the current mild upward pressure has eased.”

Next 1-3 weeks: “We highlighted yesterday (29 Aug, spot at 0.9935) that the recent EUR weakness has ended. We noted ‘while shorter-term downward momentum still suggests downside risk, EUR has to break below 0.9870 before a sustained decline is likely’. EUR subsequently rebounded and took out our ‘strong resistance’ level at 1.0015 (high of 1.0028). The break of the ‘strong resistance’ level indicates that EUR is not ready to head lower just yet. From here, EUR is likely to consolidate and trade between 0.9900 and 1.0085.”