24-hour view: While we expected EUR to advance further yesterday, we indicated that “overbought conditions suggest the next major resistance at 1.0900 is unlikely to come under threat today”. The anticipated EUR strength exceeded our expectation by a wide margin as it surged by 1.05% (NY close of 1.0945), its biggest 1-day gain in 4-1/2 months. Conditions remain overbought but EUR could rise above the major resistance at 1.0965. The next resistance at 1.1000 is unlikely to come under threat. Support is at 1.0915, followed by 1.0880. 

Next 1-3 weeks: Yesterday (15 Jun, spot at 1.0835), we noted that “the outlook for EUR is still positive and the next level to aim for is 1.0900”. Our expectation for EUR to strengthen was correct, but we did not expect the sharp rally that sent EUR surging to a high of 1.0952. We continue to expect EUR to rise, in view of the severely overbought conditions, the pace of any advance is likely to be slower. The next level to watch is 1.1000. Overall, only a breach of 1.0825 (‘strong support’ level was at 1.0755 yesterday) would indicate the EUR strength that started last Friday has come to an end.