Morning briefing: EUR/USD can fall back towards 1.1400

Vikram Murarka Kshitij Consultancy Services

Recovery in the Dollar Index, USDJPY, Euro and EURJPY from sharp movements seen over the past few sessions looks relieving today. The Dollar Index can rise back towards 100.50 while Euro can fall back towards 1.14. USDJPY and EURJPY can rise back towards 159 and 184 respectively while the recovery continues to the upside. EURINR is holding below resistance at 110.30 while Aussie and Pound are attempting to rise in the very near term before they can see a correction. USDCNY and USDINR quotes higher. A rise to 6.76/78 and 95.50/75 could be on the cards for the near term. The RBI policy meeting is due tomorrow were the markets expect the repo rate to be kept unchanged.

The US Treasury Yields remain lower but stable. There is limited room on the downside. We expect the support to hold. The yields can rise back from there and resume the uptrend. The German Yields have come down sharply. But support can limit the downside and keep the broader uptrend intact. The 10Yr GoI has come down from its day’s high yesterday. Resistance can cap the upside. The yield is likely to turn down and resume its overall downtrend. The RBI meeting outcome tomorrow will need a close watch.

Global equities have turned stronger. Dow and DAX have broken above key resistance levels and can rise further towards 54000-55000 and 26500-27000 respectively while holding above 53000 and 26000. Nifty remains bullish after a strong gap-up rally and can extend its gains towards 24900-25000, with a break above 25000 opening the way towards 25500-26000. Nikkei continues to face resistance near 66000 and remains vulnerable to a decline towards 61000-60000 while below this level. Shanghai is likely to remain range-bound within the 3750-3900 range for some time.

Brent and WTI are likely to remain within the $80-$100 and $75-$95 ranges respectively. Gold and Silver can continue to trade within the $4000-$4200 and $55-$60 ranges respectively. Copper remains constructive and needs a sustained break above $6.60 to extend its rally towards $6.70-$6.80. Natural Gas continues to move sideways but remains vulnerable to a 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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