Morning Briefing: Dollar Index and Euro continue to trade within the 105-107/108 and 1.01-1.04 range

Vikram Murarka Kshitij Consultancy Services

Dollar Index and Euro continue to trade within the 105-107/108 and 1.01-1.04 range for now and is likely to hold within the mentioned range for some more time while EURJPY is bearish below 137 with scope of falling towards 135/134. Pound is bullish above 1.20 within the 1.23-1.20 range while Aussie can test 0.6850 on a break below 0.70. Dollar Yen and USDRUB are bullish while above supports at 132 and 60/58.50 respectively. USDCNY rose sharply to test crucial resistance at 6.80 which may hold well for the near term leading to a fall to 6.78/74 with an overall broad range of 6.80-6.74 to hold for now. USDINR may open with a gap down today and can fall to 79.20-79.00 while resistance at 79.70 is likely to hold well.

The US Treasury yields have risen sharply at the near-end while those at the far-end remain stable. The immediate outlook is mixed. A further fall from here can see a deeper fall in the near-term. We will have to wait and watch. The German yields have risen across tenors and are coming closer to their crucial resistance. We expect the yields to reverse lower from there and keep the broader downtrend intact. The 10Yr and 5Yr GoI looks weak to fall in the near-term.

Dow has broken above crucial resistance at 34000 and is bullish towards 34500-34600. Dax and Nikkei too are bullish towards 14000/200 and 29500-30000. Shanghai could be ranged within 3250-3350 while Nifty has managed to close above 17800 yesterday and if the rise sustains, a further upmove from here towards 18000 or higher is possible.

Brent has declined and is likely to test crucial support at 90-87 in the near term while WTI has also broken below the key support at 87 and could target its next key support (85) on the downside. Watch US Weekly crude inventory data release due today. Gold is trading above the key support at 1780 which needs to hold to keep the 1780-1820 range intact and to prevent a fall to 1770-1750. Silver and Copper are trading above 20 and 3.6 respectively. A break lower could drag the prices further down in the coming sessions.

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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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