UOB Group’s Market Strategist Quek Ser Leang and Senior FX Strategist Peter Chia note that a test of 1.0620 is not ruled out for  EUR/USD in the near term.

Key Quotes

24-hour view: “We highlighted yesterday that EUR ‘appears to have moved into a consolidation phase’ and expected it to ‘trade sideways between 1.0455 and 1.0560’. Our view for consolidation was not wrong even though EUR traded within a narrower range than expected (1.0457/1.0532). The underlying has softened and while EUR is likely to edge lower, it is unlikely to break the strong support at 1.0420. Resistance is at 1.0495, a breach of 1.0530 would indicate the current mild downward pressure has eased.”

Next 1-3 weeks: “Our update from yesterday (06 Dec, spot at 1.0495) is still valid. As highlighted, short-term momentum is beginning to wane and EUR is likely to consolidate for a couple of days. However, as long as 1.0420 (no change in ‘strong support’ level) is not breached, there is still chance, albeit not a high one for EUR to advance to 1.0620. Looking ahead, a breach of 1.0420 would indicate that the EUR strength from late last week has ended.”