Morning briefing: Can Euro fall back towards 1.1500?

Vikram Murarka Kshitij Consultancy Services

President Donald Trump is going to announce the next FED chair soon. Markets speculate that the new chairman can guide monetary policy in a more dovish direction. The Dollar Index can have the downside limited to 96. Overall, it can trade within the 99-96 range for Euro and EURINR below 1.17 and 101.00 can fall back towards 1.15 and 99 respectively. EURJPY needs to see a break past 170 to maintain its bullishness, else a corrective to 168-166 can happen, while it trades below 170. USDJPY has immediate support near 144 and while it holds, the pair is anticipated to rise back towards 146-148 in the near term. USDCNY is trading near the lower end of its 7.20-7.17/16 range. The Aussie and Pound are headed towards the resistance near 0.66 and 1.38 respectively. USDINR on the NDF is trading lower and is likely to extend the fall towards 85.50-85.25 before possibly halting. US PCE and US Personal Income data releases are scheduled today.

The US Treasury yields remain lower. The bearish view remains intact. There is room for the yields to fall more from here. The US PCE data (for June) release today will be important to watch. A low PCE number will be negative for the yields. The PCE for May is 2.15% (YoY). The German yields are inching up to test their resistance. We expect the resistance to hold and the yields to fall back again. The 10Yr GoI remains stable and keeps the sideways range intact. We remain bullish to see an upside breakout of this range.

Global indices are showing positive momentum, with the Dow surging to 43,386.84 and eyeing a further rise towards 44,100–44,200. The DAX remains stable near 23,649.30 but needs a strong break above 23,800 to avoid a fallback to 23,000. Nifty has risen sharply to 25,549, with a bullish outlook towards 26,000–26,300 and support at 25,400. Nikkei has breached the $40,000 mark and may extend gains to $40,500–$41,000. Shanghai, though slightly down at $3,448.47, stays positive above $3,400, targeting $3,500–$3,550 in the near term.

Crude prices have risen above immediate supports and may head towards $70–$72 and $68–$70 respectively. Gold is stable above $3,300 with potential to bounce to $3,400–$3,450, while Silver may rise further towards $37.00–$37.50. Copper looks bullish after a sharp breakout, targeting $5.20–$5.30. Natural gas, however, remains weak and may decline further towards $3.50.

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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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