FX Strategists at UOB Group now believe EUR/USD could test the 1.16 neighbourhood in the next weeks.

Key Quotes

24-hour view: “Our view from yesterday that ‘the risk is still for a higher EUR’ was correct but our expectation that ‘the year-to-date high at 1.1492 could be out of reach’ was not quite right. EUR cracked 1.1492 and surged to an overnight high of 1.1539. EUR is still strong and could advance towards 1.1570 but the odds for a break of 1.1600 today are not high. On the downside, 1.1465 is expected to be strong enough to hold any pull-back (minor support is at 1.1495).”

Next 1-3 weeks: “We have held a positive view in EUR since middle of last week and we highlighted earlier yesterday (21 Jul, spot at 1.1450) that ‘the prospect for a break of the year-to-date high of 1.1492 has increased’. We added, ‘in view of the still ‘tentative’ momentum, it is left to be seen if EUR can extend its gain to 1.1540’. However, the overnight price action was anything but tentative as EUR surged and came within 1 pip of 1.1540 (high of 1.1539). Impulsive upward momentum suggests further EUR strength is likely and the next level to focus is at 1.1600. The current positive outlook is deemed as intact unless there is a breach of 1.1425. On a shorter-term note, 1.1465 is already a strong support level.”