Euro: Rebound capped by resistance against US Dollar – UOB

Euro rebounded on Tuesday as the US Dollar Index (DXY) fell, but strategists from United Overseas Bank (UOB) maintain that the broader Euro downtrend remains in place. Throughout the day, they anticipate further recovery to be confined within a specific range, while for the 1–3 week outlook, they emphasize that only a clear break above nearby resistance would suggest that recent Euro weakness has stabilized.

On Monday, EUR fell to 1.1160 before recovering. They had noted that despite the sharp drop, there had been no clear increase in downward momentum, and they had expected EUR to trade within a range between 1.1180 and 1.1255. Instead, EUR rebounded to 1.1276, closing 0.33% higher at 1.1258. While there is potential for the rebound to continue, any advance should remain within a 1.1220/1.1285 range.

Tracking their negative EUR view from mid-last month, UOB highlighted yesterday that downward momentum had begun to slow, but only a breach of 1.1285 (a "strong resistance" level) would indicate that the decline is stabilizing. They added, "until then, there is a chance for EUR to test 1.1145 next." EUR did rebound to 1.1276, and downward momentum has further slowed. However, only a clear break above 1.1285 would suggest that the weakness in EUR has stabilized.