Morning briefing: EUR/USD have extended gains
The DXY fell sharply on speculation of coordinated US-Japan intervention to support the Yen. Our targets have gotten revised on major currencies due to this unexpected volatility. The Dollar Index dropped to 96.80 before rebounding and, while above 96, can attempt to rise further. EURUSD and EURINR have extended gains but face resistance near 1.19-1.20 and 110 respectively. EURJPY and USDJPY declined but can recover while above 182 and 152. USDCNY needs to break below 6.95 to open 6.90. The Aussie has turned bullish above 0.6900, targeting 0.6950-0.7000, while the Pound remains bullish above 1.3650 toward 1.3750-1.3800. USDINR was closed due to Republic Day.
The US Treasury yields are coming down. They can test their support and then rise back again. Broadly, the bias is positive, and the current dip could be short lived. The Fed meeting outcome tomorrow night will be important to watch. The German Yields are struggling to rise further. That keeps alive the chances of seeing a fall back. We will have to wait and see what happens. The 10Yr GoI has risen back. There is room to rise further. But at the same time, the chance of an intermediate dip is also alive before the expected rise happens.
The Dow and DAX have moved up and can test 49500-50000 and 25000-25500 respectively. Nifty slipped again after pausing for a while. A decline to 24000 cannot be negated unless an immediate bounce back is seen from 25000. Nikkei has dipped on a stronger Yen but can eventually rise back towards 54000/55000. Shanghai can trade within 4050-4200 in the near term.
Brent is consolidating between $63–$67, while WTI remains weak and is likely to trade within $59–$62. Gold has broken above $5000 and, while holding above it, can extend gains towards $5100–$5200. Silver remains strongly bullish above $100 and can rise further towards $120–$125. Copper has tested $6 and may correct towards $5.8–$5.7 while below this level. Natural Gas has turned bearish below $4.0 and can decline further towards $3.6–$3.4 in the near term.
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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.
