EUR/USD: Rebound could surpass 1.0945 in the near term – UOB
16.11.2023, 11:35

EUR/USD: Rebound could surpass 1.0945 in the near term – UOB

In the opinion of Markets Strategist Quek Ser Leang at UOB Group, EUR/USD could extend the ongoing bounce to the 1.0950 region in the short-term horizon.

Key Quotes

From a high of 1.1275 in July, EUR/USD dropped sharply and reached a low of 1.0447 in early October. After EUR/USD rebounded from the low, we highlighted in our Chart of the Day (31 Oct, spot at 1.0605) that “the weakness in EUR/USD from early July has likely stabilised.” We expected EUR to trade in a range between 1.0315 and 1.0730. However, we indicated that “as long as EUR/USD does not break clearly above 1.0730, there is still a chance, albeit not a high one, for EUR/USD to dip below 1.0400 before the risk of a more sustained and pronounced recovery is likely.” 

Last week, EUR/USD rose to 1.0756. Two days ago (14 November), EUR/USD suddenly lifted off and rocketed to a high of 1.0887. While the outsized advance appears to be running ahead of itself, weekly MACD is turning positive, which suggests that there is scope for EUR/USD to rebound further. That said, we view any advance as part of a “recovery phase”, and not the start of a fresh uptrend. The recovery phase has scope to extend above 1.0945; the odds of it rising above the next resistance of 1.1065 are lower. At this time, we do not expect July’s high of 1.1275 to come back into view, at least not in the next few months. 

In order for further recovery, EUR/USD must stay above the crucial support near 1.0700, the crossover level of the 21-day and 55day exponential moving averages. Looking ahead, if EUR/USD breaks below the 55-day exponential moving average, it would mean that it is likely to trade in a range for a period of time. 

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