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Morning briefing: EUR/USD holds between 1.1550-1.1600

Most currencies look stable and lack directional clarity just now as the US-Iran conflict intensifies but fails to induce volatility into forex markets. Crucial resistances and supports need close watch to get some cues in the near term. Dollar Index holds steady below 99.50/100 and needs a break above these levels on the upside to turn bullish while Euro holds between 1.1550-1.16 for now. EURJPY is bullish towards 185/186 while above support at 184; USDJPY looks positive for a slow rise towards 160 while above 159. USDCNY is likely to hold above 6.74 for some time before resuming its downtrend. Aussie could trade between 0.70-0.71 for a few sessions before a break on either side is seen for further directional clarity. Pound can target 1.36/37 while above support at 1.35. EURINR will have to sustain a break above 111 to move up further. View is bullish. USDINR is trading at crucial levels. A decline or break above 95.75 would indicate the further near-term direction for the Rupee.

The US Treasury Yields have come down slightly from their highs. There is room to rise more to test their resistance. As mentioned yesterday, we need to see if we are going to get a correction after that or an extended rise. The German Yields continue to move up. The bullish view is intact. They can rise more from here. The 10Yr GoI has come off from its high. The chance of an extended rise is still alive. Thereafter we can expect it to resume the downtrend.

Global equities remain weak, with major indices under pressure amid the ongoing sell-off in technology stocks. Dow and DAX can decline further towards 53000 and 26000 respectively, while Nifty could fall towards 24000 after a gap-down opening. Nikkei has weakened sharply and can decline towards 65000-64000. Shanghai has also turned lower and could remain range-bound within 3900-4000 before further directional clarity emerges.

Brent and WTI are likely to stay range-bound within $80-$95 and $75-$90 respectively until a breakout provides further direction. Gold continues to consolidate within $4350-$4500 but remains bullish above $4200, with a break above $4500 opening the way towards $4600 and higher. Silver has dipped but can still rise towards $70-$75. Copper remains under pressure but could rebound towards $6.65-$6.75 if support near $6.35-$6.30 holds. Natural Gas has strengthened above $2.75 and can rise further towards $2.80.


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Author

Vikram Murarka

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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