Morning briefing: EUR/USD may rise to 1.1700

Vikram Murarka Kshitij Consultancy Services

The US Treasury's liquidity-support buyback announcement triggered a sharp fall in long-term Treasury yields and the Dollar Index, boosting the rally in major currencies. DXY could test 98.50–98.00 before rebounding; EURUSD may rise to 1.17, GBPUSD to 1.37, and EURJPY to 186. USDCNY has plunged to 6.7207 and remains bearish towards 6.70, while EURINR trades above 111 and looks bullish towards 112.50 in line with our expectations. USDINR could fall from 95.75 on Dollar weakness, but higher crude prices may limit the downside.

The US Treasury Yields have come down sharply. The Treasury Department announcing that it will double its repurchase has dragged the yields. But on the charts, nothing much has changed. The broader bullish view is still intact. The 10Yr is coming down within its range. The 30Yr has support to limit the downside. The German Yields sustain higher and keep intact the broader bullish view. They have room to rise more. The 10Yr GoI remains stable. While it sustains above the immediate support, there are good chances to see some more rise. Thereafter the broader downtrend can resume.

Global equities remain mixed, with Dow and DAX continuing to face downside pressure towards 53000 and 26000 respectively. Nifty is holding above the key 24000 support and can bounce towards 24300-24350 in the coming weeks. Nikkei remains weak after testing 65170 and can decline further towards 64500-64000. Shanghai is hovering near 3900, with a sustained break below this level opening the way towards 3850-3800 and weakening the earlier bullish view towards 4000.

Brent and WTI likely to remain range-bound within $80-$95 and $75-$90 respectively until a breakout provides further direction. Gold has broken above $4500 and can rise towards $4600-$4650 while holding above $4200. Silver remains bullish and can advance towards $70-$75. Copper has bounced from the $6.35-$6.30 support zone and can rise towards $6.65-$6.75. Natural Gas remains positive and can move above $2.80 in the coming sessions.

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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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