EUR/USD: Rebound could extend to 1.0770 – UOB

24-hour view: We highlighted last Friday that “there is room for EUR to rise further, but a sustained break of the major resistance at 1.0680 is unlikely.” However, not only did EUR break clearly above 1.0680, it also took out another major resistance at 1.0730 as it surged to a high of 1.0746. While severely overbought, impulsive upward momentum suggests EUR is likely to strengthen further to 1.0770. The major resistance at 1.0800 is unlikely to come into view today. Support is at 1.0705, followed by 1.0680. 

Next 1-3 weeks: Last Friday (03 Nov, spot at 1.0620), we highlighted that “while EUR still appears to be trading in a range, if it breaks and stays above 1.0680, it could lead to a quick rise to the next major resistance at 1.0730.” We added, “the chance of EUR breaking clearly above 1.0680 is not high for now, but it will increase further in the coming days if it stays above 1.0550.” While our view was not wrong, we did not anticipate the manner in each EUR blew past 1.0680 as it rocketed by 1.03% (NY close of 1.0729). The 1.03% gain is the largest 1-day rise since mid-July. The impulsive rally is likely to extend to 1.0770, as high as 1.0800. On the downside, the ‘strong support level has moved higher to 1.0640 from 1.0550.