Morning Briefing: Euro has dipped from 1.1033 but could limit its downside to 1.08

Vikram Murarka Kshitij Consultancy Services

The Bank of England and European Central bank, both hiked rates by 50bps yesterday and have signaled another rate hike next month of similar magnitude a inflation still remain elevated. The Dollar Index has recovered from the sharp fall seen yesterday and may trade within 101-103 now while Euro has dipped from 1.1033 but could limit its downside to 1.08. EURJPY and USDJPY look bearish for a fall to 139-138 and 126 respectively while Pound and Aussie too have fallen and could head towards 1.20 and 0.70-0.6950 in the next few sessions. USDCNY has bounced from 6.70 and can now attempt to rise back to 6.80. A range of 6.70-6.80 may hold for now. USDRUB may rise towards the upper end of the 72-68 range. USDINR has managed to close above 82.10 yesterday which is likely to hold and produce a further rise to 82.50. EURINR has declined from 90.44 and could test 88 before pausing.

The US Treasury yields have dipped further and are looking vulnerable to fall more unless a strong bounce-back is seen from current levels. The German Yields have declined sharply but have strong support coming up while above which the broader bullish view will continue to remain intact. The ECB raised the interest rates by 50-bps, more inline with the market expectation. The 10Yr and 5Yr GoI have risen back sharply from their day’s low and can rise further if they get a strong follow-through from here.

Dow has fallen back but is sustaining well above the support at 33600. DAX has surged towards the key resistance at 15600, from where a short corrective fall is expected to be seen in the coming sessions. Nikkei has moved up above 27500 and while above it there is room to target further upside. Shanghai has fallen back from the level of 3300 and is likely to remain range bound for some time. Nifty is managing to hold above the support at 17400 and while above it there is scope to move up higher in the near term.

Brent and WTI is coming off towards the key support at $80.50-80 and $75 respectively which is expected to hold and produce a bounce back from there. Gold has declined as the resistance at 1975 held well. Silver has come down towards the support at 23.50 as expected and may fall further below 23.50. Copper is coming off breaking below the support at 4.1 and looks bearish to target further downside.

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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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