24-hour view: Our view for EUR to trade sideways in a range of 1.1195/1.1265 was incorrect. EUR fell to a low of 1.1173 and then recovered to end the day at 1.1198 (-0.25%). Despite the recovery, the underlying tone still appears to be soft. There is a chance for EUR to retest the 1.1175 level before the risk of a more sustained rebound increases. Resistance is at 1.1225, followed by 1.1245. 

Next 1-3 weeks: We have held a positive EUR view since early last week. After EUR rose to 1.1275, we highlighted yesterday (19 Jul, spot at 1.1235) that “there is a chance of EUR rising to 1.1300 before the risk of a pullback increases.” We did not expect EUR to pull back to a low of 1.1173 in NY trade. Upward momentum has eased considerably with the pullback. However, only a clear breach of 1.1160 (no change in ‘strong support’ level) would suggest that EUR is not strengthening further.