EUR/USD should clear 1.0720 to allow for a potential test of the 1.0750 in the next weeks, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.
24-hour view: “We highlighted yesterday that ‘faltering upward coupled with overbought conditions suggests that EUR is unlikely to strengthen further’ and we expected EUR to ‘consolidate and trade between 1.0670 and 1.0750’. However, EUR dropped to 1.0641 before rebounding. The price actions still appear to be part of a consolidation and EUR is likely to trade within a range of 1.0645/1.0720 for today.”
Next 1-3 weeks: “We highlighted yesterday (25 May, spot at 1.0730) that a break of the major resistance at 1.0750 would not be surprising. We did not expect the sharp pullback that came within one pip of our ‘strong support’ level at 1.0640 (low of 1.0641). Upward momentum is beginning to wane and EUR has to move and stay above 1.0720 within these 1 to 2 days or the chance for a break of 1.0750 would diminish quickly. Conversely, a break of 1.0640 (no change in ‘strong support’ level) would indicate that the upward pressure that started earlier this week has eased.”