Euro: Rebound against US Dollar faces key cloud barrier – UOB

UOB Group’s Quek Ser Leang highlights that EUR/USD has staged a sharp rebound after drifting sideways, following a decline from January’s high to mid-June’s low. The pair is seen with scope to extend gains, but the analyst stresses that the 1.1560/1.1565 zone, aligned with the daily Ichimoku cloud top and a weekly trendline, is critical resistance, while support is noted at 1.1470 and 1.1445.

Rebound constrained by cloud resistance

"EUR/USD rose briefly to 1.2078 in late January before declining to 1.1324 in mid-June. It then drifted sideways until last week, when it rebounded sharply. Given the deeply oversold weekly slow stochastic, the rebound was not surprising."

"While there is scope for EUR/USD to rebound further, it must first surpass the significant resistance at 1.1560/1.1565."

"The upper boundary of the daily Ichimoku cloud at 1.1560 was tested a few times this week but remained intact. The declining weekly trendline from January’s high is currently near 1.1565. Looking ahead, should EUR/USD break and hold above 1.1560/1.1565, it could rise toward 1.1622, the minor peak in June."

"Support is at 1.1470 (current level of the 21-day EMA), followed by the lower boundary of the daily Ichimoku cloud at 1.1445. If EUR/USD breaks below 1.1445, it would mean that the top of the cloud may continue to act as significant resistance for some time."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)