Sharp rally appears excessive, but there is a chance for Euro (EUR) to test 1.1625 against US Dollar (USD). In the longer run, for the time being, EUR is likely to trade in a range between 1.1435 and 1.1660, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

EUR is likely to trade in a range

24-HOUR VIEW: "EUR surged to a high of 1.1597 last Friday. Although the sharp rally appears to be excessive, there is a chance for EUR to test 1.1625. The major resistance at 1.1665 is unlikely to come into view. Support levels are at 1.1540 and 1.1505."

1-3 WEEKS VIEW: "After holding a negative EUR view for a few days, we highlighted in our latest update from last Thursday (31 Jul, spot at 1.1430), that EUR 'view remains negative and the next level to watch is at 1.1350'. We also indicated that 'to maintain its strong downward momentum, EUR must hold below 1.1550 (‘strong resistance’ level).' In the NY session last Friday, EUR staged a sharp rally that reached a high of 1.1597, before closing up by a significant 1.48% at 1.1584. The breach of our ‘strong resistance’ has invalidated our negative EUR view. Despite the strong surge, it is too early to expect a further sustained rise. For the time being, we expect EUR to trade in a range between 1.1435 and 1.1660."