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Morning briefing: Bears continue to hold strong in most currency pairs

Bears continue to hold strong in most currency pairs but could see a correction if Dollar Index bounces from immediate support at 105 as that could limit Dollar Yen fall to 130 and rise in Euro and Aussie 1.03 and 0.71 respectively. EURJPY if breaks below 134 can be bearish towards 132 while Pound has managed to break above 1.22 which if sustains can take it higher towards 1.24/25 in the near term. USDCNY can rise to 6.80 on a break above 6.78 while USDRUB can be headed towards 65-70 on the upside. USDINR needs to hold above support at 79 to bounce back to 79.40/50 else can see a test of 78.90/80/70 before an eventual bounce is seen in the medium term.

The US Treasury yields have declined sharply across tenors. The 10Yr has broken below a key support and will now have more room to fall from here. The German yields continue to move down and are keeping our bearish view intact. The 10Yr and 5Yr GoI have declined sharply and can fall further to test their key supports and then can reverse higher again.

Equities have fallen after some sessions of strong rally. Dow has come off from 32972 and can test 32500/400 which is a decent support while Dax has dipped too and can fall towards 13400 above which view is bullish. Nikkei has scope to test 27000-26750 on a break below 27500 else a bounce back from 27500 if seen will be bullish. Shanghai can bounce from 3150 while Nifty has been rising strong and is headed towards 17500-17800 in the medium term. Any correction if seen from current levels can take it down to 17000/16900 initially.

Brent and WTI have fallen further as expected and look bearish to test their key support in the near term. Gold has entered into the key resistance zone of 1800, a break above which is needed to continue the bullish momentum in the coming sessions. Silver and Copper struggles to move up above the resistance at 20.5 and 3.6 respectively.


Visit KSHITIJ official site to download the full analysis


Visit KSHITIJ official site to download the full analysis

Author

Vikram Murarka

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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