24-hour view: We expected EUR to “rise further” yesterday and we held the view that “1.1050 could be just within reach.” While our view for EUR to strengthen was correct, we did not expect the manner in which it jumped not only above 1.1050, but also April’s peak of 1.1095 (high has been 1.1140). Not surprisingly, conditions are severely overbought but there appears to be enough ‘residual’ momentum to carry EUR higher. That said, 1.1200 is likely out of reach today (there is another resistance at 1.1170). Support is at 1.1110, followed by 1.1075.

Next 1-3 weeks: On Monday (10 Jul), when EUR was trading at a much lower level of 1.0965, we indicated that “rapid increase in momentum is likely to lead to further advance in EUR.” We added, “The level to watch is 1.1010, followed by 1.1050.” In our most recent narrative from Tuesday (11 Jul, spot at 1.1000), we highlighted that “upward momentum remains strong, and if EUR breaks above 1.1050, the next level to aim for is the year-to-date high of 1.1095.” In line with our expectations, EUR rose but we did not quite expect it to jump above both 1.1050 and 1.1095 yesterday (EUR surged to a high of 1.1140 in late NY trade). Needless to say, momentum is still strong, and EUR could rise further to 1.1200, as high as 1.1250. The upside risk is intact as long as EUR stays above 1.1035 (‘strong support’ level was at 1.0930 yesterday).