Morning Briefing: EUR/USD has the upside capped at 1.1800

Vikram Murarka Kshitij Consultancy Services

The Dollar Index fell to the lower end of its 100-98 range after the US CPI release increased rate hike expectations by FED in Sep-25. The downside is expected to be limited to 97/96. EURUSD has the upside capped at 1.18. EURINR needs a decisive break past 102.50 to head towards 103-104. For now, the downside targets of 101.50-101.00 are kept alive. EURJPY & USDJPY have the scope to head towards 174/175 and 150/151 respectively in the coming sessions. USDCNY is stuck within 7.1750-7.1900. The Aussie is coming off but overall, it can trade within 0.64-0.66 region for some time. The Pound gave a break above 1.35 and if sustained can test 1.36/37 before halting. USDINR can head towards 88 in the near term.

The US Treasury yields have risen but could have decent resistance in the near term, from where a short dip is possible. The US CPI data release came in higher as widely expected, which could be positive for the yields in the next few sessions. The German yields have risen sharply too, and look bullish for the coming sessions. The 10Yr GoI has also risen well yesterday, sharply breaking above 6.40%. However, it could face resistance near 6.55/58% which could limit the near-term rise. A decisive break above 6.58%, if seen can be further bullish in the medium term.

The Dow is up after a higher CPI release yesterday keeping the Sep-25 rate cut possibility intact by the FED, while the Dax closed lower yesterday. The Dow has scope for a rise towards 45000 while Dax could have room to decline to 24000-23500 before eventually rising higher towards 24450/480. Nifty could attempt to rise today towards 24850 while above 24400. Nikkei appears bullish for the medium term, targeting 44000, while Shanghai may face rejection near 3700.

Brent and WTI are falling as expected, with further declines towards $64–$62 and $62–$60 respectively. Gold is holding above $3,400, with a break lower targeting $3,350. Silver has rebounded from $37.50 but needs to clear $38.50 for further gains. Copper is testing a breakout above $4.50, which could lead to $4.60–$4.80. Natural gas has dropped to $2.7740, with scope for further fall towards $2.75–$2.70.

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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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