Morning briefing: EUR/USD has scope to trade within 1.1450-1.1600

Vikram Murarka Kshitij Consultancy Services

The FOMC kept rates unchanged but revised expectations of inflation to higher levels cutting the growth forecasts lower. Hawkish comments boosted the Dollar index taking it above 100. There can be scope of trade between 100-101 with series of resistances in the region. Euro has scope to trade within 1.1450-1.16 while EURINR needs to sustain above 109 now to avoid another dip below the level and rise back instead towards 109.5-110. EURJPY may test 183 before rising back towards 186 later. USDJPY may trade within the 160-161 region. USDCNY can test 6.78 before coming off towards 6.76/75 again. Aussie and Pound looks bearish for the very near term. USDINR may open with a gap up today but may later fall towards 94 in the coming days.

The US Treasury Yields have surged at the near-end (2Yr and 5Yr) and has dipped at the far-end (30Yr). The 10Yr Yield has also gone up. The US Federal Reserve’s forecast showing a possible rate hike this year has triggered this rise in the near-end yields. The Fed kept the rates unchanged in this meeting in line with the market expectation. On the charts, the 10Yr can rise more on a break above its immediate resistance. The 30Yr can dip more before reversing higher. The German Yields have come down further. There is room to dip further. The 10Yr GoI remains lower. It can fall more from here.

Global equities remain supported by optimism surrounding the expected signing of the US-Iran MoU and improving risk sentiment. Dow continues to trade near record highs and can rise towards 52500-53000. Nifty has broken above 24000 and can extend gains towards 24250-24500. Nikkei remains strong above 71000 and can rise further towards 71500-72000. DAX and Shanghai are also showing positive momentum and can advance towards 25250-25500 and 4125-4150 respectively.

Crude prices continue to weaken as the expected signing of the US-Iran MoU and the reopening of the Strait of Hormuz have eased concerns over supply disruptions. Brent and WTI remain bearish and can decline further towards $75-$70 and $70 respectively. Gold is holding above key support and can rise towards $4500-$4600, while Silver needs a sustained break above $70 to target $72-$74. Copper remains constructive above $6.40 and can rise towards $6.70-$6.75. Natural Gas continues to trade within its broader $3.00-$3.50 range.

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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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