Morning briefing: Euro is nearing the immediate resistance at 1.1200

Vikram Murarka Kshitij Consultancy Services

Good Morning!

The Dollar Index fell sharply below the support of 100.50 after the weaker US Consumer Confidence release at 98.70. Needs to see whether the rise further gets extended to 99.50 or gets halted near the current levels. Watch out for the US New Home sales release today. Euro is nearing the immediate resistance at 1.12. USDJPY and EURJPY have upside limited to 144-145 and 161/162 respectively from where they are likely to fall back towards 142-140 and 158-157 respectively in the medium term. Aussie tested 0.69 but a sustained rise past it will be needed to bring 0.70 into the picture. Immediate support is seen around 0.6850 region. The pound has surpassed our target of 1.34 and if it rises past 1.3450, it can target higher levels of 1.36-1.3650. USDCNY has tested below the support of 7.0250 and if the fall extends further, a test of 6.97/94 looks likely. It needs to bounce back immediately to avoid further decline. EURINR could trade within 92-94 region for a few sessions. USDINR may dip from 83.70 towards 83.60/50 today on stronger Euro and Yuan.

The US Treasury and the German yields remain stable. The broader view remains bearish. Both the US Treasury and the German yields have room to fall further from here. Any intermediate bounce can be short-lived, and their resistances can cap the upside. The 10Yr GoI has dipped slightly within its consolidation range. Bias is negative to break the range on the downside and fall eventually.

Dow Jones, DAX and Nifty continues to rise but all have resistance overhead which needs to be cleared for increased bullishness or else they might fallback. Nikkei has fallen back a bit but has near term support which if holds can produce a bounce back. Shanghai has seen a strong rise breaking above its resistance at 2800 after People's Bank of China reduced its medium-term lending facility rate by 30 bp to 2%. If the break sustains, Shanghai might rally further in the near term.

Brent and WTI have scope to test their key resistance. After that we need to see if the resistance holds and lead to a fall from there or the crude prices are able to break higher. Gold, Silver and Copper have risen sharply in line with expectations for have key resistances overhead which they have to surpass for increased bullishness or else the Metals could witness a fallback. Natural Gas has dipped below 2.85 and might come down further while below the resistance at 2.9-3.0.

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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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