United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann report that EUR/USD briefly broke above major resistance at 1.1610 to 1.1614 before fading, leaving the Euro in a near-term consolidation between 1.1560 and 1.1600. The 1–3 week outlook remains positive, but the pair must break and hold above 1.1615 to open 1.1655, with strong support anchored at 1.1525.

Euro consolidates after failed breakout

“24-HOUR VIEW: EUR rose sharply to a high of 1.1585 last Friday. Yesterday, we indicated that “the rapid rise appears to be running ahead of itself, but as long as 1.1545 (minor support is at 1.1555) is not breached, EUR could rise to 1.1590.” We added, “based on the prevailing momentum, a sustained rise above this level appears unlikely, and the major resistance at 1.1610 is unlikely to come under threat.” While EUR held above 1.1545 (low was 1.1558), it broke above 1.1610, reaching a high of 1.1614. However, EUR was unable to hold on to its gains, as it retreated to close little changed at 1.1579 (+0.09%). EUR appears to have entered a consolidation phase. Today, we expect EUR to trade between 1.1560 and 1.1600.”

“1-3 WEEKS VIEW: We revised our EUR view from neutral to positive yesterday (17 Aug, spot at 1.1570). We highlighted the following: “The price action suggests that EUR is likely to trade with an upside bias from here. Currently, it is unclear whether EUR has sufficient momentum to reach the major resistance at 1.1610. On the downside, a break below 1.1525 (‘strong support’ level) would indicate that EUR is likely to continue range-trading.” We did not expect EUR to rise sharply and briefly to 1.1614. While the upside bias remains intact, given that there is no significant increase in upward momentum, EUR must break and hold above 1.1615 before a move to 1.1655 can be expected. On the downside, the ‘strong support’ remains unchanged at 1.1525.”