United Overseas Bank strategists Quek Ser Leang and Lee Sue highlight a strong EUR/USD rebound after an early New York selloff, shifting their stance from negative to cautiously constructive. The Euro (EUR) is now expected to probe higher resistance levels, with upside contingent on holding nearby supports, while a failure could see the pair revert to range trading rather than a sustained advance.

Euro recovery eyes 1.1220–1.1250

“24-HOUR VIEW: Following Wednesday’s price action, we highlighted yesterday that EUR “has likely entered a range-trading phase between 1.1120 and 1.1190.” The subsequent price movements did not unfold as expected. During the early NY session, EUR fell sharply to a low of 1.1103. The decline was, however, brief, as EUR rebounded strongly to close at 1.1178 (+0.23%). Strong momentum suggests there is scope for EUR to rise further toward 1.1220. Given the overbought conditions, EUR is unlikely to break clearly above this level. To keep the momentum going, EUR must hold above 1.1155, with minor support at 1.1170.”

“1-3 WEEKS VIEW: We turned negative on EUR on Tuesday (27 Oct, spot at 1.1175). After EUR dropped to a low of 1.1111 and rebounded strongly, we highlighted the following yesterday (29 Oct, spot at 1.1160): “Downward momentum has slowed somewhat with the rebound, and EUR must break and close below 1.1110 before a sustained decline can be expected. The likelihood of EUR closing below 1.1110 will remain intact as long as 1.1190 (‘strong resistance’ level) is not breached.” EUR subsequently dropped briefly to 1.1103 before rebounding strongly to 1.1185. In the early Asian session today, EUR rose above our ‘strong resistance’ at 1.1190. Downward momentum has eased. There has been a tentative buildup in upward momentum, and EUR could rebound further to 1.1220. Looking ahead, if EUR closes above 1.1220, it could rise further to 1.1250. On the downside, a breach of 1.1130 would indicate that EUR is more likely to range-trade rather than heading to 1.1220.”