EUR/USD: the euro is supported by the Brexit, what risks and targets should we consider? (UOB)

The EUR/USD pair peaked at 1.1140, after a 1-day rally of about 80 pips, amid hopes of a UK-EU agreement on Brexit.

Despite significant variations in a three-step day, the GBP/USD also improved significantly.

And although the EUR/USD showed a slight decline this morning, the market remains cautious while the agreement mentioned yesterday has yet to pass the vote in the UK parliament, the trend remains generally bullish, and the euro remains above 1.11 Dollar.

Technical analysis

Graphically, the trend will remain immediately bullish as long as the EUR/USD remains above the important support zone at 1.1080-1.11.

In the event of a break below the threshold, a test of the 100-hour moving average towards 1.1060 will be possible, ahead of the 200-hour moving average towards 1.1030. Then, the key psychological threshold of 1.0990-1.10 will be at stake.

In the event of a break below this threshold, the dominance of sellers will be confirmed, with 1.0960, 1.0940, 1.09 and 1.0880 (the 2019 1-year low) as potential downside targets.

On the upside, yesterday's peak at 1.1140, coupled with the intermediate psychological threshold of 1.1150 will be the first resistance level to be taken into account, ahead of the psychological threshold of 1.12.

EUR/USD hourly chart

In order to properly address the evolution of the EUR/USD today and next week, we suggest that you review the recent bank analyses below:

What are the banks' forecasts for EUR/USD?

Following the recent rally, UOB's financial strategists now expect the EUR/USD to rise to 1.1165.

"While we were of the opinion that "further gains for the euro seem likely", we expected that the strength of the euro would meet "a solid resistance near last month's peak at 1.1110 (the next resistance being at 1.1135)". The EUR then climbed to 1.1139 during London hours before trading mainly laterally and ended the day on a strong note at 1.1122 (+0.47%). The rise is technically in the overbought territory, but strong momentum suggests that the EUR may move above the 1.1139 peak, although the main level of resistance at 1.1165 is probably out of reach for today. On the downside, support is at 1.1100 but only a break of 1.1080 suggests that the current strong upward pressure has eased".