EUR/USD: Bias to sell rallies - OCBC

The Euro (EUR) has been somewhat resilient lately despite the poor prints on Euro-area PMIs as well as increased bets on ECB to cut in October. Pair was last at 1.1187 levels, OCBC FX analysts Frances Cheung and Christopher Wong note.  

Double-top at 1.12 awaits

"OIS shows 82% probability for 25bp cut priced (vs. 46% probability 2 weeks ago). And EUR's relative resilience can be attributed to optimism with China's recovery after policymakers unleashed a big package of support measures. This week, focus shifts to German CPI (Mon), Euro-area CPI estimate (Tue)."

"Softer-than-expected prints should see a 25bp cut at 17 Oct meeting more or less fully priced. This may weigh on EUR. Elsewhere, there is plenty of ECBspeaks this week (about 17 officials scheduled, with Lagarde tonight) - we watch for any shift in tone on policy guidance."

"Daily momentum is not showing a clear bias while RSI turned lower. Risks remain skewed towards the downside. Double-top pattern observed - typically associated with bearish reversal. Resistance at 1.12 (double-top). Support at 1.11 (21 DMA), 1.1030,60 levels (50 DMA, 23.6% fibo retracement of 2024 low to high). Bias to sell rallies."