Morning briefing: DXY fell after Trump downplayed the Dollar’s decline

Vikram Murarka Kshitij Consultancy Services

Major currency pairs briefly broke key levels before reversing, leaving the near-term trend unclear. We will need to wait for clearer price action to confirm the next move. DXY fell after Trump downplayed the dollar’s decline. It needs to hold above 96 to rebound towards 98, else risks slipping to 94. Watch out for the FOMC meeting today wherein the FED is expected to keep the interest rates unchanged at 3.75%. EURUSD and EURINR have cooled and can drift lower towards 1.18 and 108 while below 1.20 and 110. EURJPY and USDJPY can recover while above 182 and 152. USDCNY may ease towards 6.90, Aussie could pull back to 0.68 below 0.70, Pound upside looks capped near 1.38–1.40, and USDINR needs a break below 91.50 to target 91.25–91.00. India’s IIP data is due today.

The US Treasury yields remain lower but stable. There is not much room on the downside. We expect the immediate support to hold and trigger a bounce. Broadly, the bias is positive. We will have to wait and see if the Fed meeting outcome tonight is giving the trigger for the expected bounce. The German yield remains stable. They look vulnerable to fall rather than getting an extended rise. We will have to wait and watch. The 10Yr GoI is attempting to bounce. Bias is positive, and there is room to rise more.

The Dow and DAX have dipped ahead of the FOMC policy decision tonight. Dow can rise while above support near 48500-48000 while DAX can trade lower while below resistance near 25000. Nifty has risen after the India-EU trade agreement. But a decisive break above 25500/600 is needed for medium term bullishness. Nikkei could rise towards 54000/55000 while above 52000/53000. Shanghai can rise towards 4200.

Crude prices have strengthened, supported by geopolitical concerns, with Brent eyeing $69–$71 and WTI targeting $64–$66. Gold remains strong after testing $5190 and can extend gains towards $5250–$5300 on a break above $5200. Silver stays bullish above $100 with upside towards $120–$125. Copper remains under pressure below $6.10, keeping the downside open towards $5.70. Natural Gas continues to stay weak with scope to fall further towards $3.60–$3.40.

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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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