Morning briefing: EUR/USD could trade within 1.1550-1.1650

Vikram Murarka Kshitij Consultancy Services

Dollar Index has risen slightly but can be bearish while below 100 while Euro could trade within 1.1550-1.1650 in the near term. Aussie and Pound could rise above 0.72 and 1.36 respectively while EURINR looks bearish for a dip to 109.50-109. Indian Rupee strengthened as RBI sold dollars and increased the short dollar position which could keep rupee strength intact for the near term while the Chinese Yuan can strengthen towards 6.70 soon while 6.7250/7270 holds. USDJPY and EURJPY can rise in the near term towards 161-162 and 186 respectively.

The US Treasury Yields continue to move up. Rising oil price is pushing the yields higher. The Treasury yields have room to rise more. Outlook continues to remain bullish. The German Yields remain in their resistance zone. Need to see if they are able to breach the resistance and go higher or falling down from here. The 10Yr GoI has risen just above its key resistance. If the breakout sustains, then the yield can rise more. It will also negate our view of seeing a fall back.

Dow and DAX remain weak and could fall further towards 52500-52000 and 25500, respectively, as Middle East tensions weigh on sentiment. Nifty is also under pressure and, while it remains below 24,200, the chances are slightly tilted towards a break below 24,000, which could drag it towards 23800-23700. Nikkei needs to hold above 64500 to keep the earlier upside view towards 67000-68000 intact, while Shanghai is likely to remain range-bound within 4000-3850 for some time.

Brent and WTI have turned strongly bullish after breaking above our earlier ranges and could move towards 100 and 95, respectively, as US-Iran tensions remain high. Gold and Silver remain weak and could fall further towards 4200 and 62-60, respectively, while higher Treasury yields and hawkish Fed expectations continue to weigh on them. Copper can hold within 6.5-6.8 as long as 6.5 remains intact. Natural Gas is likely to remain range-bound between 2.70-3.00 while below 3, but a break above 3.00 could open the way towards 3.25-3.50.

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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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