UOB Group currency strategists note that the EUR / USD could now try to reach the 1.2200 level In the next weeks.
Key Comments:
24 hour view: “Our expectation for the EUR / USD to consolidate was incorrect as it made a sudden and sharp rally and broke the main resistance at 1.2011 (September high). The breakout of the key resistance resulted in a rapid rise to a high of 1.2076. While the strong rally is overbought, the strong momentum suggests that the EUR / USD is likely to strengthen further. The next resistance is at 1.2100 followed by 1.2130. On the downside, the ‘breakout’ level near 1.2010 is acting as solid support now (minor support is at 1.2035). “
Next 1-3 weeks: “After EUR / USD failed to break through the key 1.2011 level and retreated sharply from the high of 1.2003, we indicated yesterday (Dec 1, EUR / USD at 1.1935) that ‘the odds of further EUR strength have diminished unless the EUR / USD can move and stay above 1.1980 in these 1-2 days. ‘ That said, we were quite expecting the way the EUR turned around, surpassing the 1.2011 level and spiked to a high of 1.2076 – note that the EUR / USD closed with a whopping + 1.19% (1.2070) , his biggest daily gain since March. The clear breakout indicates that the EUR / USD has moved into its next bullish leg. The pair is likely to strengthen, especially when there are few notable resistance levels. From here on, the level to focus on is 1.2200. On the downside, the ‘strong support’ has moved higher to 1.1950 from the previous level of 1.1900. On a short-term note, the ‘breakout’ level near 1.2010 is already solid support. “
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