EUR/USD: Expected to Rise Further Toward 1.1800 — UOB

UOB FX strategists Quek Ser Leang and Lee Sue Ann released their latest report, maintaining a constructive stance on EUR/USD. Despite recent consolidation around 1.1660, the strategists emphasized that as long as the key support at 1.1630 holds, EUR/USD retains upside potential in the near term, with the next target pointing to 1.1725.

**Short-term momentum focuses on 1.1725 resistance**

The strategists noted that EUR/USD has shown resilience, continuing to attract buying interest above the key support level, with the path of least resistance tilted to the upside. They suggested that tactical long positions could be considered, with a stop-loss set below the 1.1630 support level. A firm break above 1.1725 resistance would confirm further strengthening of upward momentum.

**Medium-term technicals point to 1.1800**

Within a 1-to-3-month timeframe, UOB analysis indicates that decisive breakout signals have emerged on the technical front, with the weekly MACD indicator maintaining positive territory, providing technical justification for further upside in EUR/USD. Based on this, the bank sets its medium-term target at 1.1800 and 1.1850. However, the strategists also cautioned that the market remains highly sensitive to macroeconomic data and speeches from ECB and Fed officials, and any unexpected shift in monetary policy expectations could quickly alter the technical landscape.

**Market divergence persists**

Despite UOB's bullish view, dissenting voices remain in the market. As previously reported, Citi had forecast that EUR/USD could fall to the 1.10 level over the next 6 to 12 months, citing the possibility of "re-acceleration signals in the U.S. economy." Additionally, if the euro continues to strengthen, it may test the ECB's tolerance for currency appreciation, with some views suggesting that the 1.20 level remains the "bottom line" for ECB policymakers.