EUR: Upside bias points to 1.1725 — UOB

EUR/USD is trading at 1.16628. Earlier, UOB FX strategists Quek Ser Leang and Lee Sue Ann noted in a report that the pair has broken out of its recent narrow range and closed near 1.1675, showing initial upward momentum. According to market reports, UOB sees constructive price action with the path of least resistance on the upside.

**Key support and upside target**

The analysts have identified a clear support zone, stating that as long as EUR holds above this level, the bullish outlook remains valid; a break below would signal weakening demand and a potential trend reversal. UOB further noted that if the pair can effectively break the next resistance level, it would confirm strengthening upward momentum, and there is currently an opportunity to strategically establish long EUR positions. Previous analysis indicated that the upside bias points toward the 1.1725 area.

**Market divergence and potential risks**

Despite the above bullish view, market opinions on EUR's outlook are not unanimous. Some believe the euro's rally may be largely over, with factors such as the energy crisis putting pressure on the eurozone economy. Meanwhile, the divergence in policy expectations between the Federal Reserve and the European Central Bank remains a significant influence on the exchange rate: the Fed has recently signaled tolerance for higher inflation, while the ECB sees no need for a more aggressive response to economic shocks. Combined with upcoming macroeconomic data releases, these factors could quickly alter the current technical picture, and investors should remain vigilant against exchange rate volatility.