Morning briefing: EUR/USD can dip towards 1.1350

USD/JPY has broken above 162.85 to trade at all time highs since 1986. It can target 164.50-165 if the rise sustains, pulling EURJPY towards 187/188 on a break above 186. However, markets remain cautious for any intervention from the BOJ to reduce the pace of currency weakness. Dollar Index has broken above 101 and can rise towards 101.50-102, supported by US-Iran tensions and higher crude prices. EURUSD can dip towards 1.1350, while EURINR may test 109.50 before bouncing. USDCNY can trade within 6.76-6.7850 while Aussie may dip to 0.6950 and Pound can test 1.34-1.3450. USDINR may dip to 96-95.85 while below 96.50. The markets expect the ECB to keep rates unchanged and maintain a cautious stance tomorrow. However, 2 more rate cuts are expected, the first one possibly in September if crude prices continue to rise from current levels.

The US Treasury Yields are continuing to move up. They have risen above their intermediate resistance. While this sustains, there is room to rise more from here. The German yields continue to move up and can rise further. The ECB meeting outcome tomorrow will need a close watch The 10Yr GoI remains lower. It has to sustain above its immediate support to keep alive the chances of seeing one more leg of rise. Else, it can resume the fall from here itself. We will have to wait and watch.

Global equities have improved after recent weakness. Dow and DAX continue to hold within their broader ranges of 52000-53000 and 24700-25500 respectively. Nifty remains above the key 24000 support and can rise towards 24600 in the near term. Nikkei has rebounded sharply and needs a break above 68000 to extend its rally towards 70000-72000, while failure to do so could lead to a pullback towards 66000-65000. Shanghai has turned stronger after bouncing from 3750 and can rise further towards 3900-3950.

Brent and WTI can rise further towards $95 and $90 respectively. Gold has strengthened above $4100 and can test $4200, while the broader $4000-$4200 range remains intact. Silver is likely to remain range-bound between $55 and $65 while support at $55 holds. Copper has rallied sharply on supply concerns and can extend its gains towards $6.60-$6.70. Natural Gas has recovered and is likely to trade within the $2.80-$3.00 range for some time.