The pair’s stance has now shifted to neutral from bearish in the short term horizon, according FX Strategists at UOB Group. 24-hour view: “We expected a higher EUR last Friday but were of the view that “a clear break of the strong 1.1960 level seems unlikely”. EUR managed to crack this resistance to hit a high of 1.1968 before easing off. The undertone still appears to be positive and there is room for EUR to probe the next resistance at 1.1990. At this stage, a sustained move above this level is not expected. Support is at 1.1925 but the stronger level is at 1.1890”.
Next 1-3 weeks: “In last Friday’s update (11 May, spot at 1.1920), we highlighted “the diminished odds for further EUR weakness” and the subsequent break of the ‘stop-loss’ at 1.1960 confirms that the bearish phase that started earlier this month has ended. The outlook for EUR is deemed as neutral now and last week’s 1.1821 low is viewed as a short-term bottom. To look at it another way, the decline that started in mid-April from a high of 1.2413 has likely found a base at 1.1821 and from here, we believe EUR has moved into a consolidation/correction phase. That said, the immediate bias is tilted to the upside even though any advance is viewed as part of a 1.1850/1.2050 correction/consolidation phase and not the start of a bullish reversal”.