Morning briefing: EUR/USD is range-bound between 1.1800–1.1600
The Dollar Index remains bullish towards 100.00–100.50 with limited downside to 97, while EURUSD is range-bound between 1.18–1.16 with bias for a break below 1.16. EURINR could test 101 before bouncing within a 101–102.50 range, and EURJPY is attempting to break lower towards 170–168 unless it sustains above 173 for a bullish move to 174–175. Dollar-Yen holds above 147 support and can rise towards 150–151, while USDCNY remains weak towards 7.1650–7.16. Aussie is bearish below 0.6450 targeting 0.64–0.6350. Pound can extend its fall towards 1.34. USDINR stays bearish towards 86.75–86.50 after failing to hold above 87.16.
The US Treasury yields have dipped further and have come into their support zone. We expect the support to hold and the yields to reverse higher again going forward. The Fed Chairman Jerome Powell’s speech at the Jackson Hole meeting tomorrow will be important to watch.The German yields are coming down in line with our expectation. There is room to fall more from here. The 10Yr GoI has come down and can dip further. It can oscillate in range for some time with a negative bias to fall eventually over the medium term. Strong resistance is there to cap the upside.
The Dow Jones is stuck below 45200-45000 and unless a strong follow-through rise is not seen above the mentioned zone, we may expect a fall to 44500-44400 initially. Dax continues to trade within 25000-23500, both being crucial resistance and support levels. A break above 25000 will be needed for the index to rise further towards 25500 over the medium term. Nifty needs to breach 25100 to move towards 25250; else, a decline back towards 24700 can be seen. Nikkei has faced rejection from 44000 and could decline towards 42000 initially. Shanghai looks strong towards 3800-4000. 4000 is a strong resistance.
Brent and WTI have risen as expected and may see slight further upside towards $68 and $64 respectively before resuming their bearish trends. Gold is recovering and could rise towards $3,400–$3,450, while Silver needs to break above $38 to turn bullish towards $39–$40, else it risks falling back to $36.50. Copper remains range-bound between $4.30–$4.50, and Natural Gas still looks weak towards $2.70 support, from where a bounce could occur.
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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.
