Euro: Rebound capped by resistance against US Dollar – UOB
The Euro's recent rebound is struggling against notable resistance versus the US Dollar, which reflects a near-term bias towards sustained dollar strength. As highlighted by UOB, this resistance indicates a limitation on the upside potential for the EUR/USD pair. The desk's analysis suggests that while there may be somewhat bullish sentiment longer-term based on consensus targets, immediate technical resistance alongside macroeconomic factors continues to weigh on the Euro's performance.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.1634 (median across 12 firms), with CIBC at the upper bound (1.2200) and TMGM at the lower (1.1447). UOB's recent projection aligns closely with this framing, suggesting a moderate outlook for the Euro in the short term despite bullish projections by other firms.
How firms align
Rabobank and SocGen are positioned bullishly with targets of 1.1759 and 1.1700, respectively, suggesting potential for upside beyond the immediate resistance mentioned by UOB. In contrast, TMGM’s lower target of 1.1447 reflects a more cautious stance, indicating a risk that the Euro could remain capped against the Dollar. For further details on these perspectives, see our reports on Rabobank and SocGen.
What the data shows
Recent revisions reveal a slight upward adjustment in targets from firms like Rabobank and UOB, with continued interest in finding a bullish angle despite resistance levels. Notably, our recent published research highlights trends in EUR/USD movements that could indicate divergence from consensus, particularly in the context of broader macroeconomic conditions. See /research/eurusd-ecb-rate-path for insights into the current landscape.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Resistance to EUR/USD rally near 1.13 suggests limited upside in the near term.
- 02Traders should watch for breaks above or below the current resistance level.
- 03Potential catalysts include upcoming ECB announcements or US inflation data.
- 04Macro indicators could sway sentiment towards more bullish targets for the Euro.
Market implications
Next week’s ECB meeting will be crucial, especially if they signal any shift in policy direction. A significant move in EUR/USD could be triggered if the pair breaks above 1.1300, which would align with our consensus target of 1.1634 and signal a potential shift in the current bearish sentiment.
Risks to this view
This bullish outlook could be invalidated if there’s a surprise in US economic data, particularly labor market indicators that could strengthen the dollar further. Additionally, any hawkish tilt from the ECB may also deter upward momentum for the Euro.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.65
Sources & References
How we cover this story
Other coverage on this pair
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