Morning briefing: EUR/USD continue to stay rangebound between 1.1800–1.1600

Vikram Murarka Kshitij Consultancy Services

The Dollar Index failed to hold its gains after news of Trump firing Fed Governor Lisa Cook. The downside can be limited to 97 and until further clarity the target of 99.00-99.50 is kept alive. EURUSD and EURINR continue to stay rangebound between 1.18–1.16 and 103.00-101.50. EURJPY is trading lower within its 173-171 range. Dollar-Yen is also coming off and a confirmed break below 147 if seen can drag it further to 145 initially before bouncing back later. USDCNY can test 7.14 soon. Aussie and Pound can trade within 0.655-0.645 and 1.36-1.34/33 range respectively. USDINR had risen well yesterday and is currently trading higher on the NDF as well. The pair could extend its up move towards 87.87–88.00 in the near term. US Durable goods, US Case Schiller & US Consumer Confidence data releases are scheduled today.

The US Treasury yields have bounced back thereby reducing the chances of more fall. Broadly it looks like the yields can oscillate in a range. Within the range there is limited room on the downside which keeps the chances high for the yields to rise back again. The German yields have bounced back. The support is holding well. If this sustains, the yields can rise further in the coming days. The 10Yr has risen and come up to its crucial resistance. We expect the resistance to hold and the 10Yr GoI to fall back.

The Dow Jones and Dax have dipped but while the Dow could limit its fall to 45000, Dax could decline to 24000-23500. Nifty rose yesterday as expected but could decline again today as profit taking is possible before the tariff impact of 50% likely to come into effect from tomorrow. Nifty can dip to 24800 while below 24200-25000. Nikkei and Shanghai too have dipped slightly today. Nikkei can test 42000-41000 while Shanghai can test resistance at 4000.

Brent and WTI have both tested resistances near $69 and $65, and as long as these levels hold, they risk a corrective dip towards $67–$65 and $62–$60 respectively in the coming weeks. Gold remains poised for a rise to $3,450–$3,500, though failure to break above $3,450 could drag it back to $3,350 or even $3,300–$3,250. Silver is steady above $38, keeping the scope open for a climb towards $39.50–$40. Copper continues to trade within the $4.50–$4.40 range awaiting a breakout, while Natural Gas has bounced from support and could extend higher towards $2.90 unless a reversal unfolds.

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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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