EUR/USD: the immediate risk is to the upside (UOB)

UOB analysis of the EUR/USD:

Intraday analysis

The expectation of a lateral EUR/USD movement on Tuesday was inaccurate as the pair dropped to 1.1273 before soaring back up from the strong resistance of 1.1350 (the day's high was at 1.1357). While the rapid rise seems to be stretched, the movement does not yet show any sign of weakness. From then on, unless there is a movement below 1.1310, the current rise in the EUR could still test the 1.1385 area before easing (the next resistance at 1.1410 should not be taken into account).

Short-term analysis

We have maintained the same view since last Tuesday (12 February, benchmark at 1.1270) that "the EUR/USD may continue to weaken towards the 2018 low of around 1.1215". The EUR then touched 1.1231 last Friday (15 February) before consolidating. We warned against the rapid slowdown in momentum on Tuesday (19 February) and said that the euro "must evolve and stay below 1.1280 during these 1 to 2 days or a break in the "key resistance" at 1.1350 would not be surprising". While the EUR/USD fell below 1.1280 during European hours, the decline was short-lived, as it suddenly turned and reached a peak of 1.1357. Price action has shifted the immediate risk upwards, but it is too early to expect a sustained rise in the euro. Momentum indicators are dull and any increase should struggle to exceed 1.1440 (1.1410 is already a fairly solid level). In other words, while the current slight upward pressure could lead to a rise of the EUR, the prospect of a sustained increase is not high. A downward movement below 1.1270 would indicate that the current slight upward pressure has eased.