Morning briefing: EUR/USD may extend toward 1.1250–1.13 before its longer-term downtrend resumes
The Dollar Index is expected to hold above 101.50 and recover toward 102+, while EURUSD may extend toward 1.1250–1.13 before its longer-term downtrend resumes. USDJPY is likely to consolidate within 157.50–159, while EURJPY faces key resistance at 178, with failure to break higher keeping it in a 176–178 range. EURINR is expected to trade between 105.70 and 107.10, while USDCNY remains bearish toward 6.65. The Aussie needs to break above 0.7050 to target 0.71; otherwise, it may retreat toward 0.6975–0.6950, while the Pound could rise toward 1.35. USDINR may test 94.30–94.00 while below 94.50 before rebounding toward 95 and eventually higher. Downside could be limited for USDINR in the near term.
The US Treasury Yields remain lower. As mentioned yesterday, there is not much room on the downside. They can test their support and then rise back to resume the broader uptrend. The German Yields have inched up. Support is there to limit the downside from here. The yields can rise back and go higher eventually. The 10Yr GoI has risen, breaking the range on the upside. The bullish view is intact. The yield can rise more from here.
Global markets remain mixed, with the Dow and DAX expected to rise further towards 53500-54000 and 25800-26000, respectively. Nifty is likely to remain range-bound between 22,500 and 23,000, while the Nikkei needs to sustain above 64000 to recover towards 67000. Shanghai has turned weak after falling below 3700, and a sustained break below this level could drag it towards 3600-3500.
Brent and WTI remain uncertain, with near-term ranges of 105-112 and 95-100, respectively. Gold can trade sideways within 4100-4200, with a break above or below this range determining the next move. Silver is likely to remain range-bound between 55-60. Copper needs to sustain above 6.52-6.53 to avoid a further decline towards 6.45-6.40, while Natural Gas may fall further towards 2.6-2.5 amid forecasts of above-average autumn temperatures in the US.
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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.
