EUR/USD: Rising bets for a breakout of parity – UOB

UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia suggest EUR/USD could surpass the parity zone in the next few weeks.

Key Quotes

24-hour view: “We noted yesterday that ‘upward momentum is building’ and we expected EUR to strengthen. However, we were of the view that ‘the chance of EUR breaking the major and solid resistance at 0.9935 is not high’. The build-up in momentum surpassed our expectation as EUR easily took out 0.9935 and surged to a 3-week high of 0.9976. The strong boost in momentum suggests EUR is likely to strengthen further. In view of the overbought conditions, EUR might not be able to maintain a foothold above 1.0000 (the next resistance at 1.0050 is unlikely to come under threat). Support is at 0.9935, followed by 0.9905.”

Next 1-3 weeks: “Yesterday (25 Oct, spot at 0.9885), we indicated that the risk for EUR is shifting to the upside but it has to break through 0.9935 first before a sustained advance is likely. While our view of the upside risk in EUR was correct, we did not expect the rapid manner in which EUR jumped above 0.9935 (EUR soared to a high of 0.9976 in NY trade). Upward momentum has increased further and there is a high chance of EUR breaking 1.0000. The next resistance is at 1.0050. Overall, the current EUR strength appears to have room to extend in the coming days and only a break of 0.9850 (‘strong support’ level was at 0.9780 yesterday) would indicate that EUR is unlikely to advance further.”