Morning briefing: EUR/USD needs a sustained move above 1.1700 to regain upside momentum

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has fallen below 99 and remains bearish below 99.40, with downside risk toward 98.50, while EURUSD needs a sustained move above 1.17 to regain upside momentum. Dollar-Yen risks slipping toward 158 if it holds below 159, and EURINR/EURJPY may consolidate before attempting higher levels. USDCNY is biased toward 6.70. Aussie remains positive for a rise to 0.73, above 0.72, while Pound could face mild resistance near 1.37. USDINR could ease toward 95.30-95 if crude prices keep falling. The dip yesterday below 95.50 can be attributed to a decline in crude prices and possible RBI intervention.

The US Treasury Yields have come down sharply. A strong fall in the Crude Oil price has dragged the yields lower. There is room to dip further. But supports are there to limit the downside and keep the broader uptrend intact. The US PCE data release today will need a watch. The German Yields have also come down sharply. The expected corrective fall is happening a little earlier than expected. The yields can fall further from here and then bounce back again. The 10Yr GoI is stuck in a narrow range. The immediate picture is unclear. However, the upside remains open to see some more rise before resuming the downtrend.

Global equities have strengthened amid easing tensions in the Middle East. Dow and DAX remain positive and can rise towards 54000 and 26500-26600 respectively. Nifty continues to strengthen and can advance towards 24400-24450. Nikkei has broken above 66000 and can rise towards 67000-68000 while sustaining above this level. Shanghai has also turned bullish after breaking above 3900 and can move towards 4000 in the coming sessions.

Brent and WTI have plunged on easing US-Iran tensions and milder-than-expected sanctions, while their broader ranges of $80-$95 and $75-$90 remain intact. Gold continues to strengthen above $4700 and can rise towards $4750-$4800, while Silver can break above $70 and advance towards $72-$75. Copper remains bullish towards $6.80, with a sustained break above it opening the way towards $7.00 or higher, though failure could trigger a medium-term pullback towards $6.20-$6.00. Natural Gas remains constructive and can rise towards $3.00.

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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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