EUR/USD to recover if financial stress back to Europe proves to be short-lived – OCBC

EUR/USD came under pressure into late week. Economists at OCBC Bank expect the pair to recover if confidence among European bank bondholders is restored.

Near term corrective pullback

“Fragile sentiments may weigh on EUR in the interim but if concerns re EU banking sector prove short-lived (i.e. no material sell-off), then we should expect EUR to recover.”

“Daily momentum remains mild bullish, but RSI shows signs of fading. Corrective pullback not ruled out in the near term.”

“Support at 1.0730 (50-DMA), 1.0660/80 (21-DMA, 23.6% fibo retracement of Sep low to Feb high) before 1.0540 levels. Resistance at 1.0820, 1.0930 (recent high) and 1.1030 (2023 high).”

“Barring any extended risk sell-off, we look to buy dips on the pullback especially with ECB being one of the remaining hawks in town.”