EUR/USD: UOB still believes the euro will reverse back below 1.13 in the short term

Intraday EUR/USD analysis

We pointed out yesterday that it was "possible for the EUR/USD to test the main support level at 1.1300". Subsequently, the euro dipped to a low of 1.1307 before staging a surprisingly strong rebound that eliminated the very strong resistance at 1.1400 (high of 1.1411 during the New York hours). The recovery seems likely to be prolonged but at this stage, a sustained move above 1.1430 seems unlikely (the next resistance level is at 1.1460). Support is at 1.1360 but the most robust level is at 1.1335. The low of 1.1307 should not come into focus for today.

Short term EUR/USD analysis

The EUR/USD hit a 1-week low of 1.1307, before rebounding strongly to end the day up +0.44% (NY close at 1.11392). Despite the recovery, we still expect the euro to fall below the major level at 1.1265. That being said, the chances of a solid support break through 1.1200 are low. Only a move above the "key resistance" line at 1.1430 would indicate that the current downward pressure has subsided and that the EUR/USD is still caught in a broad range of lateral consolidation.