Morning briefing: EUR/USD may rise to 1.1220/1.1250

Vikram Murarka Kshitij Consultancy Services

The Dollar Index could slip to 101.50–101.00 while below 102.50; a break below 101 would turn the medium-term view bearish. EURUSD may rise to 1.1220/1.1250 before easing back to 1.11. Dollar-Yen faces resistance at 158.30 with downside possibility of 157, while EURJPY could rise towards 177/178. EURINR may dip towards 105, and the Aussie looks set to fall towards 0.69. The Pound is bullish towards 1.35, while USDINR may test 94.50 before bouncing back towards 95. USDCNY has bounced back well after weaker PMI and the central bank’s announcement to use the overnight interest rate as its main policy tool. It could trade higher for the rest of the week.

The US Treasury and the German Yields are coming down in line with our expectation. Both the Yields have room to fall further from here and test their support. After this fall they can reverse higher and resume their broader uptrend. The 10Yr GoI has come down to test its support much faster than expected. A corrective bounce is possible from this support before an extended fall breaking below this intermediate support is seen.

Global equities remain mixed, with the Dow and DAX vulnerable below 52,000 and 26,000, and downside risk towards 51,500 and 25,500. Nifty continues to show strength above 23,400, with scope towards 23,600 and above. Nikkei stays weak below 64,000, with 62,000 as the next downside marker. Shanghai has broken below 3,600 and can slide towards 3,500.

Crude oil prices slumped on Monday amid diplomatic hopes. Brent and WTI risk further extensions toward 102 and 94 before a potential bounce. Gold has staged a short-term recovery but remains biased toward 3850–3800 while capped below 4000, while Silver's minor rebound leaves it vulnerable to further declines toward 45. Copper holds support near 6.4 for a potential bounce toward 6.6–6.7. Natural Gas continues to range-trade between 2.7 and 3.2.

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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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