EUR/USD: Wide range for the time being – OCBC

Euro (EUR) found bids as French political situation saw another twist and turn while the unexpected flare-up in US-China relations weighed on US Dollar (USD). EUR last seen at 1.1570 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Broader fundamental outlook remains supportive of the euro

"On French political development, Lecornu (appointed less than a month ago had earlier resigned as PM on Monday) was subsequently appointed as PM again on Friday. A cabinet reshuffle has also taken place over the weekend, but it remains unclear how long this new team can last, given the deep political divide. The new team will have to seek compromises on budget measures to avoid any vote of no confidence."

"Additionally, the Netherlands will hold General Elections on October 29. These political developments may still pose downward pressure on the EUR in the near term. However, the broader fundamental outlook remains supportive of the euro, suggesting a bias for buy-on-dips approach (but requires patience)."

"Bearish momentum on daily chart intact while RSI showed tentative signs of turnaround from oversold conditions. Resistance at 1.1640 (100 DMA, 23.6% fibo), 1.1690 (50 DMA). Support at 1.1550, 1.1460 (38.2% fibo retracement of Apr low to Sep high). We look for 1.1550 – 1.1680 range in the near term."