In the view of UOB Group’s Markets Strategist Quek Ser Leang and Economist Lee Sue Ann, the outlook for EUR/USD now appears neutral in the near term.
24-hour view: We highlighted yesterday that EUR “is likely to edge higher but is unlikely to break above 1.0755.” However, after rising to 1.0725, EUR fell sharply to a low of 1.0658. The decline has scope to dip below 1.0640, but the next support at 1.0620 is unlikely to come under threat. On the upside, if EUR breaks above 1.0705 (minor resistance is at 1.0690), it would indicate that the current downward pressure has eased.
Next 1-3 weeks: We turned positive in EUR late last week. After EUR rose to a high of 1.0756 and pulled back, we indicated two days ago (08 Nov, spot at 1.0700) that “while upward momentum has waned somewhat, only a breach of 1.0640 would indicate that 1.0770 is out of reach.” Yesterday, EUR fell to a low of 1.0658. While our ‘strong support’ level at 1.0640 has not been breached, upward momentum has more or less fizzled out. In other words, the outlook for EUR has turned neutral. For the time being, EUR could trade sideways in a relatively broad range of 1.0580/1.0750.