Further Euro (EUR) range trading seems likely; slightly softened underlying tone suggests a lower range of 1.0850/1.0920. In the longer run, technical target at 1.0945 exceeded; deeply overbought conditions suggest while further gains are possible, the potential for additional upside may be limited, UOB Group's FX analysts Quek Ser Leang and Peter Chia note. 

Deeply overbought conditions suggest while further gains are possible

24-HOUR VIEW: "EUR surged and reached a high of 1.0947 on Tuesday. Yesterday (Wednesday), we indicated the following: 'The advance is deeply overbought, and negative momentum divergence is tentatively forming. To put it another way, further sustained rise in EUR seems unlikely. Today, EUR is more likely to consolidate its gains and trade in a 1.0870/1.0950 range.' USD subsequently traded in a narrower range than expected (1.0873/1.0930). Further range trading seems likely, even though the slightly softened underlying tone suggests a lower range of 1.0850/1.0920." 

1-3 WEEKS VIEW: "After EUR soared and exceeded our technical target at 1.0945 two days ago, we highlighted yesterday (12 Mar, spot at 1.0915) that 'While the uptrend remains intact for now, it is worth noting that conditions are very deeply overbought.' We also highlighted that 'This suggests that while further gains are possible, the potential for additional upside may be limited.' Our update remains valid. On the downside, a breach of 1.0820 (‘strong support’ level was at 1.0805 yesterday) would indicate the start of a consolidation or pullback."