Morning briefing: Euro can start rising towards 1.1300 again

Vikram Murarka Kshitij Consultancy Services

The Dollar Index tested our target of 102 before cooling down and while below it a fall back towards 100-99 can happen. If so, the Euro which slipped to 1.1065 can start rising towards 1.13 again. EURINR fell sharply to 94 but while above it there could be some scope to see rise back towards 95-96. EURJPY continues to trade within 165-160 region. USDJPY surged to 148.65 before coming down. While below 149, the pair can get dragged towards 146-145 in the coming sessions. AUDUSD is back within 0.645-0.635 range. The USDCNY below 7.20 can extend the fall to 7.15. Pound has dipped below 1.32 and if sustained, can extend the fall to 1.30. The USDINR can witness a lower opening in the onshore markets. The downside can be limited to 84.50 for now. IN & US CPI release scheduled today.

The US Treasury yields have risen sharply as expected and could soon test near term resistances before a correction sets in. The German yields have also moved up sharply and could remain bullish for the next few sessions. The 10Yr GoI remained stable yesterday below 6.40%. The yield may initially test 6.35% before attempting to break above 6.40/45%.

Positive trade tariff announcement between US and China has lowered concerns of a possible US recession, showing a positive impact on the Dow Jones, which surged to close at 42410.10 yesterday, in line with our expected upmove. Further rise to 43000-43500 looks possible soon. Dax is bullish for a rise to 24000-24500 while Nifty can rise to 26000-26500 while above 24000 in the medium term but could see a short correction before the expected rise is seen. Nikkei and Shanghai are also bullish for a rise towards 38500-40000 and 3400, respectively.

Crude prices rose on easing US-China trade tensions. Brent needs to hold above $65 for further gains, while WTI must break $62 to extend higher. Gold continues its expected decline, eyeing $3,150–$3,100, and Silver remains range-bound between $34–$32. Copper stays bearish towards $4.40–$4.20. Natural gas may gradually rise towards $4.00–$4.20 despite a slight dip.

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Author

Vikram Murarka

Kshitij Consultancy Services

Vikram has been forecasting, trading and hedging currencies since 1991. Beginning his career as a currency trader in Essar Group, he was managing an FX exposure of $1.2 bln.

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