EUR/USD could now test 1.1096 and above – UOB

FX Strategists at UOB Group suggested that EUR/USD could visit tops above 1.1090 although a move to the 1.1125 level looks unlikely for the time being.

• "24-hour view: While we highlighted yesterday that ‘an interim short-term bottom is in place’, we expected EUR to ‘trade sideways’. The sudden surge in EUR came as a surprise as it soared to an overnight high of 1.1089. While the rapid rise is running ahead of itself, there is room for EUR to move above last month’s peak at 1.1096 first before a pull-back can be expected. For today, the next resistance at 1.1125 is likely out of reach. Support is at 1.1060 but only a breach of 1.1040 would indicate the current strong upward pressure has eased.
• Next 1-3 weeks: We detected the waning downward momentum yesterday (02 Dec, spot at 1.1015) and cautioned that ‘the prospect for EUR to move to 1.0965 has diminished’. However, the subsequent rally in EUR that surged above the 1.1055 ‘strong resistance’ level came as a surprise. The price action suggests that last Friday’s (29 Nov) low of 1.0979 is an intermediate bottom and EUR could stay above this level for next 1 to 2 weeks. Despite the rapid rise, it is too early to expect a sustained advance even though a test of the strong 1.1125 resistance would not be surprising. At this stage, the probability of a sustained rise above this level is not high. All in, EUR is expected to trade with a firm footing and only a break of 1.1020 (‘strong support’ level) would indicate that the current upward pressure has eased."