In light of the recent price action, EUR/USD could now dispute the 1.0900 hurdle in the next few weeks, suggest Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
24-hour view: “We highlighted yesterday that EUR ‘is likely to trade with an upward bias but it remains to be seen if EUR can maintain a foothold above the major resistance at 1.0785’. The anticipated EUR strength exceeded our expectations as EUR surged to 1.0866 before closing on a strong note at 1.0846 (+0.85%). Despite the relatively large gains, momentum has not improved by much. That said, the risk for EUR is still on the upside even though 1.0900 is expected to offer solid resistance. Above 1.0900, there is another significant resistance level at 1.0930. Support is at 1.0825; a breach of 1.0800 would indicate that the current upward pressure has eased.”
Next 1-3 weeks: “On Tuesday (10 Jan, spot at 1.0730), we highlighted that EUR is likely to take a crack at another strong resistance level at 1.0785. Our view was not wrong as EUR cracked 1.0785 yesterday and soared to 1.0866. The improved upward momentum suggests further EUR strength. The next resistance is at 1.0900, followed by a key level at 1.0930. The upside risk is intact as long as EUR stays above 1.0760 (‘strong support’ level was at 1.0665 yesterday).”
GBP/USD continues to trade in a narrow channel at around 1.2200 in the early European morning on Friday. The data from the UK showed that GDP grew 0.1% in November, compared to the market expectation for a contraction of 0.2%, but failed to trigger a market reaction.
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