UOB strategists Quek Ser Leang and Lee Sue Ann keep EUR/USD in a neutral short-term range, seeing the pair oscillating between 1.1590 and 1.1685 after a brief dip to 1.1606. They note a tentative build-up in downward momentum, with scope for a test of 1.1605 but limited risk of a break below 1.1590, while a move under the 1.1540 trendline could open 1.1410 over coming months.

Neutral range with mild downside bias

"24-HOUR VIEW: Two days ago, EUR dropped briefly to 1.1606 and then recovered. Yesterday, we highlighted that “given the brief drop, there has been no significant increase in downward momentum.” We also highlighted that “instead of continuing to decline, EUR is more likely to trade in a range between 1.1610 and 1.1660.” EUR then traded within a narrower range of 1.1613/1.1655, closing marginally higher by 0.01% at 1.1631. The tentative increase in downward momentum suggests the bias for today is tilted to the downside. That said, given the lacklustre momentum, any decline is likely limited to a test of 1.1605. The next support at 1.1590 is unlikely to come under threat. On the upside, a breach of 1.1645 would indicate that EUR is likely to range-trade instead of trading with a downside bias."

"1-3 WEEKS VIEW: We have held the same view since last Monday (25 May, spot at 1.1620), when we highlighted that EUR “is neutral now, and it is likely to trade between 1.1590 and 1.1685.” While we continue to hold the same view, the increasing short-term downward momentum has increased the risk of a break below 1.1590."

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