Morning briefing: EUR/USD may bounce from 1.1400

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is testing 101; a break can lift it to 101.50-102, while failure may pull it back to 100.50. Safe-haven demand from US-Iran tensions and oil-linked inflation risk keeps the dollar supported, with the ECB meeting a key watch for EUR crosses this week. EURUSD may bounce from 1.14 while USDJPY needs to break above 162.85 for testing 163/165, and USDINR needs to break above 96.50 for testing 96.75; otherwise pullbacks remain possible.

The US Treasury Yields have moved up. A follow-through rise from here can take them higher and will negate the chances of falling back. The German Yields are moving up in line with our expectations. They can go further higher from here. The 10Yr GoI has come down sharply from its high. A further fall from here can drag it down and will reduce the chances of rising back again.

Dow is testing near term support at 52000, while DAX continues to hold above 24700-24800, keeping their broader ranges intact. Nifty remains constructive above 24000 and can rise towards 24400-24600. Nikkei's recovery appears limited, with the broader bearish view towards 62000 still intact. Shanghai remains weak and can decline further towards 3700-3600.

Brent and WTI can rise further towards $95 and $90 respectively. Gold continues to hold above the key $4000 support and can rebound towards $4200, while a break below $4000 could trigger a decline towards $3800-$3700. Silver is likely to remain range-bound between $55 and $65 while support at $55 holds. Copper remains bullish and can rise further towards $6.50. Natural Gas has turned weaker below $2.85 and can decline further towards $2.82-$2.80.

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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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