Morning briefing: EUR/USD is likely to remain stuck in the 1.1600-1.1700 region

Vikram Murarka Kshitij Consultancy Services

Most currencies may remain stable for the near term with a few of them likely to strengthen against the Dollar. The Dollar Index can trade between 98.80-99.50 while Euro is likely to remain stuck in the 1.16-1.17 region. EURINR is falling towards 110-109.90 while EURJPY and USDJPY look bullish for the near term towards 186.50 and 160, respectively before facing rejection later. USDCNY is headed towards 6.75. Aussie and Pound can trade within 0.71-0.7220 and 1.3350-1.35, respectively. USDINR will have to break below 95 to bring in 94.80/50 into the picture; else can bounce back from current levels towards 95.50.

The US Treasury Yields are bouncing back from their support. If it sustains, they can rise more and avoid the extended fall that we had mentioned earlier. The German Yields are coming down in line with our expectation. They have room to test their support after which a fresh rise is possible. The 10Yr GoI is hovering around 7%. A sustained rise from here is needed to avoid the fall that we are expecting to happen first.

Dow and DAX remain constructive, with Dow likely to rise towards 51500-52000 and DAX targeting 26000 while holding above 25000. Nifty has turned weak after failing to sustain above 24,000 and may decline further towards 23,300-23,200 while below 23,600. Nikkei continues to move higher in line with expectations and can extend gains towards 67500-68000. Shanghai remains under pressure and can decline further towards 4025-4000 in the near term.

Brent and WTI continue to weaken in line with expectations and can decline further towards $90 and $85 respectively, supported by optimism surrounding the US-Iran ceasefire extension and a potential reopening of the Strait of Hormuz. Gold and Silver have rebounded after testing key lows, and if these supports hold, they can rise further towards $4600-$4700 and $80-$82 respectively. Copper remains positive while above $6.25 and can advance towards $6.60. Natural Gas has exceeded expectations on the upside and can extend gains further towards $3.50-$3.75 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.

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