Morning briefing: EUR/USD can attempt to test 1.1600

Vikram Murarka Kshitij Consultancy Services

Lower-than-expected ADP Employment leads the Dollar Index to slip. Watch crucial support near 99.50, which needs to hold to keep the upside view intact. The index could be volatile this week with the US jobless claims data release today and NFP tomorrow. Euro can attempt to test 1.16 while USDJPY can take a breather and remain stable. EURJPY can rise towards 184 while Aussie and Pound can see a near-term rise towards 0.71 and 1.35 before pausing for a reversal. USDCNY holds below 6.75 and could slowly head towards 6.70 while USDINR needs to decisively break below 95 to open a downside target of 94.75/50 else can see bounce from current levels towards 95.25/50 again.

The US Treasury Yields are managing to hold above their key support. A strong bounce is needed from here to avoid an extended fall and also to resume the uptrend from here itself. We will have to wait and watch. The German Yields are hovering above their support. We expect them to bounce back from here and resume their uptrend. The 10Yr GoI has declined below its key support. A further fall from here will confirm the resumption of the broader downtrend and drag it lower. The RBI kept their policy rates unchanged at 5.25% in its meeting yesterday.

Dow can extend its rally towards 55000-55500, while DAX remains bullish above 26000 with scope to rise towards 27000-27500. Nifty continues to hold above the key 24500 support and can advance towards 24800-25000. Nikkei has resumed its upward momentum and can rise further towards 67000-68000. Shanghai is approaching the key 3900 resistance, with a sustained break opening the way towards 4000-4050.

Brent and WTI remain vulnerable to further declines towards $75-$70 and $70-$65 respectively. Gold has turned bullish after breaking above its previous range and can rise further towards $4500. Silver has also strengthened and can extend its gains towards $65-$70. Copper remains constructive and needs a sustained break above $6.80 to continue its rally towards $6.85-$6.90; otherwise, a pullback towards $6.60-$6.50 is possible. Natural Gas remains weak and can decline towards $2.65 in the near term.

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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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