Morning briefing: EUR/USD could target the 1.1100-1.1200 level

Vikram Murarka Kshitij Consultancy Services

The U.S. announced 104% duties on Chinese imports, set to take effect shortly after midnight. The Dollar Index on confirmed break below 102 can turn bearish to 101-100. The Euro above 1.09/085 can attempt to rise back towards 1.11-1.12. EURINR has risen past 95 and if sustained, can head towards 96-97. USDJPY and EURJPY can trade within 148-144 and 160-164 region respectively for now. AUDUSD has slipped below 0.60 and can be vulnerable to fall to 0.575. The USDCNY can soon test 7.35. Thereafter, whether the rise extends to 7.40 or now will have to be seen. Pound above 1.27 can again attempt to rise towards 1.29-1.30. USDINR has risen well so far. Immediate resistance is coming at 86.40/50 region. Watch price action closely around it to see whether it holds, or the pair breaks higher. Watch out for the RBI MPC meeting scheduled today.

The US Treasury yields have surged further. The resistances mentioned yesterday are broken. That negates the fall that we have been expecting. The yields will now have more room to rise from here. The US CPI data release will need a close watch today. The German yields remain stable. A strong follow-through rise from here will strengthen the bullish case. The 10Yr GoI remains stable. There is limited room on the downside from here. We expect the yield to sustain above its support and rise eventually going forward. The RBI monetary policy meeting outcome is due today.

The Dow Jones has fallen below 37900; the risk of seeing a fall towards 36500-36000 cannot be ruled out. A strong rise past 40000 is required to avoid this fall. DAX has risen to 19500, and continuing this momentum, it can rise towards 21000-21200. Nifty is moving higher towards 22800-23000. Nikkei needs a rise past 33000 to avoid falling towards 30000. As Trump levied a 104% tariff on China , Shanghai initially fell to a low of 3070 before recovering. While it sustains above 3100, it can rise past 3150 and extend the rise towards 3200-3250.

Crude prices have declined as expected, with further downside towards $55 (Brent) and $50 (WTI) likely. Gold is hovering near $3000, with a break below $2970 needed to trigger a fall to $2950–$2900; else, it may rise towards $3100–$3150. Silver remains weak below $32, with potential to drop to $28–$26. Copper pulled back after testing $4.3650; support at $4.00 is key to maintaining bullish momentum towards $4.60. Natural Gas slipped below $3.60 but may find support at $3.50; a break below this could lead to $3.00.

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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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