Morning briefing: Euro has upside capped at 1.1700
|Donald Trump announced a cease-fire agreement between Iran and Israel which was later denied by Iran. Iran had also struck missiles in US bases in Qatar, Iraq and Syria. The Dollar Index can have downside limited to 97-96 and can rise back towards 99 in the near term. Euro and EURINR have upside capped at 1.17 and 100.50 levels respectively. While it holds, both the pairs are likely to witness a corrective fall in the near term. EURJPY and USDJPY have declined from the level of 169.71 and 148 and if the fall persists, a test to 166/65 and 144 can happen respectively before it attempts to rise back again. USDCNY is trading lower within the 7.20-7.17/16 range. The Aussie and Pound are likely to remain volatile within 0.6350-0.6550 and 1.33-1.36 regions respectively, before a break happens on either side. Watch price action closely in USDINR to see whether it sustains above 86.50 and rises toward 87.00-87.20 or falls below 86.50. US Case Schiller and Consumer Confidence data releases are scheduled today.
The US Treasury yields have declined sharply. Crude Oil price tumbling about 9% has dragged the yields down. The yields are coming down within their range. We retain our bearish bias to see a downside break of the range and more fall going forward. The German Yields have dipped slightly. The view remains bearish to see more fall from here. The 10Yr GoI seems to be struggling to break the range on the upside. This can keep it inside the range for some more time. But the bias continues to remain bullish to see an upside breakout of the range and a rise eventually.
Equity indices are showing mixed signals. The Dow has bounced back strongly and could turn bullish above $42,700, while DAX holds above $23,000 with potential to rise to $23,800. Nifty may open higher and target $25,200–$25,300, supported by the $24,700 zone. Nikkei has broken above $38,500 and may head towards $40,000, and Shanghai remains firm above $3,350 with scope to rise to $3,500.
Crude prices dropped sharply after Iran's mild retaliation and Trump’s ceasefire claims, with Brent and WTI now expected to trade in the $65–$75 and $64–$70 ranges respectively. Gold is declining towards $3,300, Silver could bounce from $35 support and target 36.50-37.00. Copper remains range-bound between $4.75–$5.00 for some time. Natural gas has turned bearish below $3.80, and can target $3.60–$3.50.
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