Euro: Range-trading bias after sharp rebound against US Dollar – UOB

Overnight, the Euro (EUR) experienced a sharp rebound against the US Dollar (USD), surging from 1.1112 to a close at 1.1218, more than erasing the losses sustained the previous day. Short-term momentum appears to be overextended, with the pair expected to trade in a tight range between 1.1180 and 1.1240 intraday. Looking ahead to a one-to-three week horizon, EUR is now anticipated to reside within a broader range of 1.1160 to 1.1280 following its break of the 1.1220 resistance level.

In the 24-hour view, EUR plummeted two days ago before rebounding strongly, closing at 1.1156, marking a decline of 0.38%. At 1.1180 in the early Asian session, it was noted that the recovery could extend, yet it should remain within the 1.1155/1.1205 range. However, the forecast was inaccurate, as EUR surged to 1.1240 before slightly easing to finish 0.56% higher at 1.1218.

The swift advance seems to be overextended, suggesting EUR is unlikely to climb much further. Currently, it is expected to trade between 1.1180 and 1.1240.

For the next three weeks, a negative EUR outlook has been maintained for over a month. On October 15th, it was pointed out that while further EUR weakness is not entirely ruled out, the decline from the previous month appears overextended, both in time and price. Only a breach of the 'strong resistance' level of 1.1220 would indicate that EUR is not expected to decline further.

Subsequently, EUR rose and surpassed 1.1220, reaching a high of 1.1240. EUR may have transitioned into a range-trading phase, and for now, it is expected to fluctuate within the 1.1160 to 1.1280 range.