Morning briefing: EUR/USD faces immediate resistance at 1.1650

Vikram Murarka Kshitij Consultancy Services

The Dollar Index can still rise towards 100-101 while above 98.80-98.50. EURUSD & EURINR faces immediate resistance at 1.165 & 103.50. Failing to see a rise past these levels can drag both the pairs toward 1.15/14 & 102.50 or lower respectively. EURJPY has support coming at 174. While it holds the targets of 178-180 are kept open. Similarly, as long as Dollar-Yen remains above 150, it can attempt to rise back towards 153-154. USDCNY continues to consolidate between 7.14-7.12. While the Aussie stays range-bound between 0.645-0.660. The Pound remains weak below 1.34, with risks of falling to 1.32 or lower. USDINR can rise towards 89.00-89.25 in the coming weeks.

The US Treasury yields have dipped. That keeps intact our view of seeing more fall. Resistance can cap the upside in case of any bounce. The German yields are at their support. We expect them to bounce back from here and rise going forward. The 10Yr GoI has dipped and is just above a key support. Failure to bounce back from here will negate the rise that we have been looking for. That in turn can take the yields lower.

Equities are looking mixed. The Dow has moved well and can test 46500-47000 while the Dax can head towards 25000 while above 24000. Nifty has fallen sharply and if it fails to hold above 25060, it can plunge back to 24800-24600 region. Nikkei could test 48000-48500 if the current rise sustains. Shanghai has declined sharply from 3900+ levels. Failure to see an immediate rebound can take it down to 3800-3750.

Crude prices have reversed sharply lower, with Brent likely to fall further towards $61-60 while below $64/65, and WTI vulnerable to a drop towards $57-56 while below $60/61. Gold remains strong after hitting a new all-time high near $4190, with potential to rise towards $4250-4300 if it breaks above $4200. Silver also looks bullish despite a brief pullback, targeting $52-53 before any correction. Copper continues to trade weak and may stay range-bound between $4.9-5.2 for now. Natural Gas is approaching key support near $2.9, from where a bounce towards $3.1-3.2 is possible unless it breaks lower towards $2.8/2.7.

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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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