EUR/USD room for a test of 1.1640 – UOB

FX Strategists at UOB Group noted the pair’s squeeze higher could see 1.1640 tested in the next weeks.

Key Quotes

24-hour view: “Instead of trading sideways (as expected yesterday), EUR staged a surprisingly robust recovery and hit a high of 1.1608. The subsequent strong daily closing (NY close of 1.1597) suggests there is room further EUR strength even though the major 1.1640 resistance is unlikely to yield so easily (next resistance is at 1.1670). Support is at 1.1575 but the stronger level is at 1.1545”.

Next 1-3 weeks: “There is not much to add as EUR hit a low of 1.1527 yesterday before staging a mild recovery. As highlighted last Friday (03 Aug, spot at 1.1585), while we maintain a neutral stance, the risk has shifted to the downside and the major 1.1500/10 support zone is likely to be retested (note that EUR touched 1.1506 in May and 1.1507 in June). While the prospect for a sustained move below this major support zone is still not high, it has improved and will continue to improve unless EUR can break above the ‘key resistance’ at 1.1640 (level unchanged from yesterday). Looking further ahead, a clear break of 1.1500/10 could potentially lead to a rapid drop to the next major at 1.1365”.