Morning briefing: EUR/USD gains momentum above 1.1400

Vikram Murarka Kshitij Consultancy Services

The Dollar Index seems to be reacting less to rising crude and has chosen to remain stable around 101, which has led to strength in the Euro above 1.14. Yen to 162.66, Aussie above 0.70, and EURJPY above 186. However, we may expect the Dollar Index to test 100.70 before bouncing back towards 102 in the medium term, indicating that the above-mentioned strength in the currencies may be short-lived. EURINR looks bullish towards 110.50-111 while USDCNY can trade within 6.75-6.7850 for some time. Pound can test 1.33 while below 1.3550. USDINR has risen to close above 96.50 yesterday, which reduces chances of a fall to 96-95.85 and reinforces upside targets of 96.75-97.00. ECB policy meeting is due today, where markets expect the rates to be kept unchanged.

The US Treasury and the German Yields sustain higher. Both remain bullish and have room to rise more from here. The ECB meeting outcome today will need a close watch. The 10Yr GoI has risen back again. That still keeps alive the chances of seeing some more rise from here before the broader downtrend resumes.

Dow and DAX are likely to remain within the 52000-53000 and 24700-25500 ranges respectively. Nifty has turned weak after slipping below 24000 and needs to reclaim this level to revive the bullish outlook towards 24400; otherwise, it could decline towards 23800-23750. Nikkei has pulled back from key resistance and can fall further towards 65000-64000. Shanghai remains firm and can rise gradually towards 3900-3925.

Crude prices remain strong, amid escalating geopolitical tensions. Brent and WTI can extend their rally towards $95 and $100 respectively. Gold is likely to remain within the broad $4000-$4200 range while below $4200. Silver can continue to trade within the $55-$65 range. Copper remains bullish despite the recent correction and can rise further towards $6.60-$6.70. Natural Gas has recovered and is likely to trade within the $2.80-$3.00 range for some time.

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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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