Morning briefing: The Dollar Index is oscillating above the immediate support around 107.75

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is oscillating above the immediate support around 107.75. While the support holds, it can rise towards 109-109.50. Euro, EURINR and Aussie continue to trade within 1.0450/0550-1.0350/0300, 89.50/90.00-88.00 and 0.6300-0.6200 respectively until a decisive break is seen on either side. The pound has bounced well from the support at 1.25 but can face rejection around 1.2650. USDJPY needs to see a rise past 158 to head towards 160 or higher. EURJPY, above 164 can test 166-167 on the upside. At the same time, any fall below 164 can make it vulnerable to test 162 in the coming sessions. USDCNY is oscillating below the target of 7.30. While it trades above 7.25, the overall view is bullish towards 7.35. USDINR rose to a high of 85.81 on Friday before coming down. We anticipate that the pair can remain stable below 85.65 for the next 1-2 weeks and can test 85.20/10 before moving higher.

The US Treasury yields have risen well and are keeping intact our bullish view. The yields can rise more going forward. The German yields have risen sharply and have come up to their resistances in line with our expectation. A break above the immediate resistance can see an extended rise in the coming days. The 10Yr GoI tested its resistance zone and then came down again. While the resistance holds, the yields can fall in the coming days. Only a strong break above the resistance will negate the bearish view.

The Dow Jones turned lower, closing below 43,000. A sustained rise above 43,400 is necessary to trigger a rally towards 44,000. Otherwise, the index may decline further to 42,000-41,800. DAX has held above 19,800 and risen well but can find resistance near 20100/200 from where a decline to 19600/500 looks likely. Nifty faced rejection at 24,000 but managed to close slightly higher. It continues to trade within the range of 23,600-24,000, maintaining its sideways movement unless a clear breakout is seen on either side of the range. Nikkei, after reaching a high of 40,398, has declined and is now trading below 40,000. A close above 40,000 is critical to sustain the bullish momentum and target 41,000. Shanghai remains steady above 3,400. While it holds above this level, the index could rise to test the resistance at 3,450.

Brent and WTI have risen slightly on Friday. A range of 73-75 (Brent) and 69-72 (WTI) can hold for some time. Metal prices can also remain ranged between 2650-2600 (Gold), 29.0-30.5 (Silver) and 4.15/4.20-4.05 (Copper) for the near term. Natural Gas looks bullish towards 3.8-4.0.

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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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