Morning briefing: Euro may extend to 1.0950 if current momentum is intact

Vikram Murarka Kshitij Consultancy Services

US CPI data came in softer than expected, surprising the markets and leading to sharp depreciation in the Dollar Index against major currency basket. The Dollar Index and Euro may extend to 103 and 1.0950 if current momentum is intact else may face reversal over the next few sessions. EURJPY continues to remain bullish towards 165/166. USDJPY is holding below resistance at 152 and could bounce from 150. Failure to bounce from 150 can drag it towards 148. Aussie has risen sharply from 0.6350 itself and could trade within 0.6350-0.6550. Pound could decline from 1.2550/1.26 in the near term. USDCNY is bearish towards 7.22/20 while below 7.28/30. USDRUB can bounce from 90/89 towards 93/94 else a break below 89 is needed for further bearishness. EURINR can be bullish towards 91/92. USDINR should fall below 83.10 today on strength in the Euro and Chinese Yuan but we need to see if the RBI allows the fall to happen.

The US Treasury yields have come down sharply after the inflation data release yesterday. The US Headline CPI rose 3.23% (YoY) in October, down from 3.69% a month ago. The Core CPI rose 4.02% (YoY) down from 4.13% over the same period. Key supports are coming up for the yields which can be tested. The price action thereafter will need a close watch for a reversal. The German yields have declined sharply and have more room to fall from here. The 10Yr GoI remains vulnerable to fall while it remains below its immediate resistance. The 5Yr GoI looks mixed and can oscillate in a narrow range.

Dow Jones looks bullish for the near term. DAX has surged above 15500 and a further rise above 15650 is needed to negate our bearish view. Nifty can rise back taking cues from the global markets. Nikkei has entered into the crucial resistance zone and can witness a fall if that holds well. Shanghai has risen back as the support at 3025 held well and looks bullish to target further highs.

Brent and WTI have come down after facing their immediate resistance at $84 and $80 respectively and while below these resistance, prices can dip further. Gold, Silver and Copper have surged after the release of lower than expected US CPI which came in at 3.23% for Oct-23 than market expectation of 3.78%. Natural Gas is to remain ranged while below 3.30.

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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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