EUR/USD: Short-term top in place? – UOB

FX Strategists at UOB Group suggested a breach of 1.1700 could signal a short-term top in EUR/USD just above 1.19 during last week.

Key Quotes

24-hour view: “EUR rose to a high of 1.1908 last Friday before tumbling back down to a low of 1.1758. The rapid pullback has room to extend lower but for today, the strong support at 1.1700 is likely ‘safe’ (minor support is at 1.1750). Resistance is at 1.1805 followed by 1.1830.”

Next 1-3 weeks: “We first expected EUR ‘to trade with a positive note’ more than 2 weeks ago on 15 Jul (spot at 1.1410). As EUR advances, we continue to hold the same view and in our latest update from last Thursday (30 Jul, spot at 1.1785), we highlighted that ‘upward momentum is beginning to show early sign of ‘tiring’ and this coupled with the still overbought conditions suggests that the rally that started about 2 weeks ago could be taking a breather soon’. We added, ‘while EUR could move above 1.1830, the next major resistance at 1.1950 could be out of reach this time round’. EUR rose to 1.1908 last Friday before dropping sharply to end the day lower by -0.61% (1.1774), its biggest oneday decline in 7 weeks. Risk of a short-term top has increased further but confirmation is only upon a break of 1.1700 (‘strong support’ level previously at 1.1680). Overall, unless EUR moves and stays above 1.1860 within these 1 to 2 days, a break of the ‘strong support’ would not be support surprising.”