Morning briefing: EUR/USD may rise towards 1.1300

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has fallen below 102 after the absence of a hawkish signal from Kevin Warsh’s speech on Friday and could extend its decline towards 101.25-101.00, while the Euro may rise towards 1.13 before the broader downtrend resumes. USDJPY could consolidate within 157-159, and EURJPY may decline towards 176 while below 178. EURINR remains bearish towards 105, below 107, though a near-term bounce towards 107 or higher is possible in the next couple of sessions. USDCNY has broken below 6.69 and could move towards 6.68. USDINR may trade within 94.75-95.20/30, with a break on either side determining the next move. The Pound looks bullish towards 1.35 while above 1.33, whereas the Aussie needs a decisive break above 0.70 to target 0.72/0.73.

The US Treasury Yields remain lower. There is some more room to dip further from here. Thereafter a fresh rise can happen to keep the broader uptrend intact. The German Yield have inched up. But the upside can be capped. A dip to test its support is likely to be seen first before the broader uptrend resumes. The 10Yr GoI is stuck inside a narrow range now. The bias is positive. Support is there to limit the downside. The yield has potential to rise more from here.

Dow remains capped below 52500, with scope to decline towards 51500. DAX can move towards 26000 while it holds above 25250. Nifty can extend towards 23500 while it holds above 22800. Nikkei remains vulnerable to a pullback towards 64000 or lower while below 65000. Shanghai needs to sustain above 3700 to move towards 3800, else it can fall towards 3600.

Brent and WTI crude prices have surged amid a weaker dollar and escalating Middle East tensions. The near-term outlook remains upward. Gold needs to hold above $4100 to target $4300-$4400, while silver remains vulnerable to a fall towards $52-$50 below $60. Copper could rise towards $6.70-$6.80 if support holds, while natural gas may trade within the $3.00-$3.50 range amid forecasts of mild US autumn temperatures.

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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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