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EUR/USD to rally if financial stress returning to Europe proves short-lived — OCBC

The pair EUR/USD he came under pressure at the end of the week. OCBC Bank Economists they expect the pair to recover if confidence is restored among European bank bondholders.

Short Term Corrective Retracement

“Fragile sentiments may weigh on the euro in the interim, but if concerns about the EU banking sector are short-lived (ie no major sell-offs), then we should expect the euro to recover.”

“Daily momentum remains slightly bullish, but RSI shows signs of fading. Corrective pullback not ruled out in the short term.”

“Support at 1.0730 (50 DMA), 1.0660/80 (21 DMA, 23.6% Fibonacci retracement from September low to February high) before 1.0540 levels. Resistance is seen at 1.0820, 1.0930 (high recent) and 1.1030 (2023 high)”.

“Short of prolonged risk selling, we prefer to buy dips on the pullback, especially given that the ECB remains one of the aggressive ones.”

Source: Fx Street

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