Morning briefing: EUR/USD could decline towards 1.1500 and lower

Vikram Murarka Kshitij Consultancy Services

The Dollar index has pulled itself up despite the softer CPI release yesterday, indicating near-term bullishness on a break above 100. That said, the Euro, EURJPY, Aussie, and Pound could decline towards 1.15 and lower, 183/182, 0.70/69 and 1.33, respectively, in the near term. USDJPY can aim for 160-161 while above 159. EURINR is holding below resistance near 110.30 and can soon fall towards 109-108. Aussie and Pound can test 0.71 and 1.3550 before being rejected. USDCNY can target 6.70 in the medium term. USDINR could trade below resistance at 95.50 for now. A range trade between 95.50 and 95.10 looks likely.

The US Treasury Yields remain lower. They have room to test their support and then resume their broader uptrend eventually. Data release yesterday showed that the US Headline CPI has come down sharply to 3.3% (YoY) in July from 3.46% in June. The German Yields have bounced back from their lows. Supports are there to limit their downside. Outlook remains bullish, and the yields can rise more. The 10Yr GoI has come back into the narrow range. We retain our bearish view to see a downside break of this range.

Global equities remain mixed. Dow is drifting lower towards 53000 while continuing to trade within the broader 53000-55000 range. DAX remains constructive and can rise towards 27000-27500 despite struggling to sustain above 26500. Nifty has shown a good recovery from recent lows and can move higher towards 24500 and above while support near 24350-24300 holds. Nikkei has turned strongly bullish after breaking above 68000 and can extend its rally towards 70000. Shanghai remains near key resistance around 3970, with a break higher opening the way towards 4050, while failure to break above could lead to a pullback towards 3900-3850.

Commodities remain mixed, with crude prices consolidating within broad ranges of $80-$95 for Brent and $75-$90 for WTI. Gold remains bullish and can break above $4500 to rise towards $4600-$4650, while Silver can extend its gains towards $70-$75. Copper remains weak and can decline further towards $6.50-$6.45. Natural Gas continues to strengthen and can rise towards $2.80-$3.00 while holding above the key support near $2.60.

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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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