Morning briefing: EUR/USD may trade in the 1.1350-1.1420 region

Vikram Murarka Kshitij Consultancy Services

The Dollar Index holds stable ahead of the FOMC tonight. The markets expect rates to remain unchanged with a 30% probability to a surprise rate hike. We continue to look at the near-term range of 100.70-101.50 to hold for now while Euro may trade in the 1.1350-1.1420 region. EURINR trades higher today above 109 but the risk of slipping towards 108.50 or lower remains on the cards. USDJPY remains bullish towards 164.50-165 with immediate stability for a few sessions while EURJPY can extend to 187/188 while above 186. USDCNY may trade within 6.75- 6.7850. Aussie may test 0.69 while Pound may find support near 1.3250 before bouncing towards 1.34. USDINR has tested 95.6250 before closing higher. There is some scope to see 95.50/25 this week before resuming the upmove towards 96 or higher again.

The US Treasury yields trade lower and could continue to decline for the near term before testing respective supports and resuming the uptrend in the longer run. The Fed meeting policy meeting tonight will need close watch where the markets expect the rates to be kept unchanged. The German Yields are also trading lower but could see limited room on the downside as support levels could soon produce a bounce and take the yields up to resume the broader uptrend. The 10Yr GoI has come down sharply. While below 6.80%, the yield is bearish for a test of 6.70/60% unless immediate reversal is seen. Overall near term view looks bearish.

Dow needs a sustained break above 53000 to extend its rally towards 53500-54000; otherwise, it is likely to remain within the 52000-53000 range. DAX also requires a sustained break above 25500 to rise towards 26000, failing which it could decline towards 25000-24800. Nifty needs to hold above 24000 to move higher towards 24100-24150. Nikkei remains bearish and can decline further towards 60000 or lower. Shanghai also continues to trade with a weak bias and can fall towards 3750-3700 while below 3900.

Crude prices can trade in a broad range amid continued uncertainty over geopolitical tensions in the Middle East. Gold can continue to trade within the broad $4000-$4200 range, while Silver is expected to remain range-bound between $55 and $65. Copper remains constructive above $6.30 and can rise towards $6.50. Natural Gas has turned weaker after breaking below $2.70 and can decline further towards $2.65.

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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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