Morning briefing: Euro can fall towards 1.1050-1.1000 in the medium term

Vikram Murarka Kshitij Consultancy Services

The lower US PCE and Personal income took the Dollar Index to the low of 100.15 before recovering a bit from there. An immediate range of 101.50-100.20 can hold for some time. The Euro, while below 1.12 can fall towards 1.1050-1.10 in the medium term. USDJPY and EURJPY remained volatile due to the Presidential victory of Former Defense Minister Shigeru Ishiba which created uncertainty in the future policy decisions. The ongoing fall, if continues, can get extended to 140 (USDJPY) and 157-156 (EURJPY) in the near term. while the Aussie needs to rise past 0.6950 to become further bullish, Pound may trade within 1.3440-1.33. USDCNY is trading near the crucial support at 7. Need to see whether it holds or not. EURINR could trade within 92-94 region for a few sessions. USDINR is likely to hold the range of 83.40/50-83.70/80.

The US Treasury and the German yields have reversed lower again as expected. The resistances are holding well and are keeping intact the broader downtrend. Both the US Treasury and the German yields have room to fall more from here. The US PCE data released on Friday can keep the Treasury yields under pressure. The PCE for September came in lower at 2.37% (YoY), down from 2.65% in August. This keeps the prospects high for more rate cuts going forward. The US ISM PMI data release tomorrow will need a close watch. A weak PMI number can drag the yield further lower. The Indian 10Yr GoI has bounced back sharply. The support is holding well, and the yield can rise more from here.

Dow Jones and Nifty have come off a bit but have near term supports, while above which the outlook remains bullish for the near term. DAX continues to rise and have room to move up further from here. Nikkei has fallen back sharply from levels below 40000 but downside might be limited to 37500-37200. Shanghai has broken sharply above its crucial resistance. Now, if the break sustains, a further rise could be seen in the coming sessions.

Crude prices have recovered a bit but have key resistance ahead, while below which the broader picture may remain bearish for the near term. Gold, Silver and Copper looks bearish for the near term while below the resistance at 2700, 33.00 and 4.80 respectively. Natural Gas has recovered well and might test 2.9-3.0 on the upside.

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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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