Euro (EUR) is likely to consolidate between 1.1665 and 1.1745. In the longer run, increase in upward momentum is not enough to indicate a sustained rise; EUR must first close above 1.1745, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Upward momentum is not enough to indicate a sustained ris

24-HOUR VIEW: "After EUR dropped to a low of 1.1598 last Thursday, we highlighted on Friday, when it was at 1.1615, that it 'could drop below the 1.1595 support level, potentially testing 1.1575.' EUR subsequently dropped to a low of 1.1581. During the NY session, EUR took off and rallied to a high of 1.1742, closing at 1.1715, up sharply by 0.95%. The sharp rally appears to be overstretched, and instead of continuing to rise, EUR is more likely to consolidate between 1.1665 and 1.1745."

1-3 WEEKS VIEW: "We turned negative on EUR last Wednesday (20 Aug, spot at 1.1645), indicating that it 'could edge lower and test 1.1595.' After EUR fell to a low of 1.1598, we highlighted on Friday (22 August, spot at 1.1615) that 'for a continued decline, EUR must first close below 1.1595.' We added, 'the likelihood of EUR closing below 1.1595 will remain intact as long as 1.1675 (‘strong resistance’) is not breached.' We did not expect EUR to drop to 1.1581 and then surge to a high of 1.1742. This time around, the increase in upward momentum is not enough to indicate a sustained rise. For EUR to continue to rise, it must first close above 1.1745. The odds of EUR closing above 1.1745 will increase over the next few days, as long as the ‘strong support’ level, now at 1.1630, remains intact. Looking ahead, should EUR close above 1.1745, it would increase the probability of an advance above 1.1790."