Morning briefing: Euro can hold below 1.1000

Vikram Murarka Kshitij Consultancy Services

Some volatility was seen on the Dollar Index, Euro and USDJPY yesterday after the FOMC minutes was released but seems to have subdued impact on the markets. Sell off in Dollar Index triggered after the recent US inflation data release may continue to push the index down to 102 or lower while Euro can hold below 1.10 and USDJPY can fall to 148/146 before showing some reversal. EURJPY can fall to 161/160 while Aussie and Pound look bullish for a potential rise to 0.66/67 and 1.26/28. However, there could be some initial pause from 0.66 and 1.26 before the upper targets are met. USDRUB needs a bounce back from 88 else could be strongly bearish. USDCNY is bearish to 7.10/7.05. EURINR has fallen while below resistance at 92 and could now be headed towards 90.50-90 while USDINR could head towards 83.50 while it sustains trade above 83.30.

The US Treasury yields are poised at their crucial support. A strong rise from here would be bullish and will avoid the danger of seeing an extended fall. The German yields are coming down as expected. They have room to test their supports after which a reversal is possible. The 10Yr GoI can rise further if it breaks above the immediate resistance and then fallback again. The 5Yr GoI can move up within its sideways range.

Dow Jones has dipped slightly but broder outlook remains bullish for a test of 35400-35500 on the upside. DAX is stable and may consolidation between 15800 and 16000 for some time. Nifty has risen within its sideways range but needs a decisive break on the upside to strengthen the momentum further. Nikkei outlook is mixed. Shanghai can fall towards 3025 before rising back from there.

Brent and WTI remains stable but view is bullish for a rise towards their resistance in the near term. Gold and Silver outlook remain bullish. Copper has dipped from levels below 3.85 and if it sustains below 3.85, a further fall can seen. Natural Gas remains subdued and has scope to test 2.8-2.7 before a bounce back can happen.

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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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