Societe Generale’s Kenneth Broux notes EUR/USD has rebounded after forming an interim low near 1.1325 and moved back into its prior range, signalling limited follow-through on the earlier breakdown. The bank stresses that resistance at 1.1475/1.1500 must be cleared to extend the bounce, while a drop below 1.1390 would risk resuming the broader downtrend.

Bounce capped by 1.1500 barrier

"EUR/USD has staged a modest rebound after carving out an interim low around 1.1325. The pair has re-integrated within previous range, indicating a lack of follow-through after the recent breakdown."

"However, clear signals of a large up move are not yet visible. The recent pivot high at 1.1475/1.1500 is the first layer of resistance. Overcoming this will be crucial for signalling an extension of the bounce."

"Conversely, there could be a risk of a continuation of the downtrend if the pair breaches the recent pivot low at 1.1390."

"Euro bid for second day as dust settles around oil prices. Support 1.1390, resistance 1.1500. Massive option expiries at 1.1370-85 (€1.3bn), 1.1400-50 (€6.5bn). US CPI, PPI, Warsh semi-annual testimony next week."

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