EUR/USD extra gains on the cards while above 1.2280 – UOB

There is room for further gains in the pair in the near term as long as the support at 1.2280 holds, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that the improved undertone could lead to “a test of 1.2350” but apportioned low odds for “further extension to 1.2380”. Nowotny’s comments resulted in a rapid rise in EUR that touched an overnight high of 1.2377. The subsequent strong daily closing suggests further upward pressure but in view of the overbought conditions, it would be surprising if EUR can maintain a toehold above 1.2400 (there is another strong resistance at 1.2425). On the downside, we expect 1.2305 to be strong enough to hold any intraday pull-back (minor support is at 1.2330)”.

Next 1-3 weeks: “While we noted yesterday that the “weak undertone is stabilizing”, the continuing EUR strength that easily took out the strong 1.2350 resistance was not exactly expected. The subsequent strong daily close in NY has shifted the immediate pressure to the upside but at this stage, we are not anticipating a sustained move above last month’s top near 1.2475. On a shorter-term note, 1.2425 is already quite a formidable level. Overall, we expect EUR to stay underpinned from here as long as the ‘key support’ at 1.2280 is intact”.