Morning briefing: EUR/USD rally hinges on a confirmed break above 1.1800

US GDP came out stronger than expected at 4.3% (3.2%), while US Consumer Confidence declined to 89.1 (91.7). The Dollar Index has slipped below 98 and could test 97.50–97.00 before stabilising. EURUSD needs a confirmed break above 1.18 to extend the rise towards 1.19–1.20. EURINR may trade in the 104–106/107 range for some time. EURJPY and USDJPY can test 184–183 and 154 respectively before attempting a bounce later. USDCNY is coming off as anticipated and can test 7.025 or even 7.00 while below 7.045. AUDUSD is heading towards resistance near 0.68. The Pound needs a sustained move above 1.355 to extend gains towards 1.36 and higher. Meanwhile, RBI announced ₹2 lakh crore of liquidity infusion through OMO purchases of government securities and a $10 bn USD/INR Buy–Sell swap (3-year tenor) to inject durable liquidity into the banking system. USDINR is trading below 89.50 in the NDF market. If the spot opens lower in the onshore market, an initial test of 89.00 can be seen before the pair attempts to bounce back later.

The US Treasury yields have come down sharply after testing their resistance. That keeps the sideways range intact. We will have to wait for the range breakout to get clarity on the next move. The German Yields have also come down sharply. But supports are there to limit the downside and keep the uptrend intact. The 10Yr GoI has come off sharply from the day’s high. View remains bullish. There is still room left on the upside for the yield to rise before witnessing a reversal.

Dow and DAX continue to rise as expected and could target 49000 and 24400 respectively. A break past 24400 in DAX can lead to further upmove towards 24500/600 else a rejection from 24400 can take it back towards 24000. Nifty can slowly reach towards 26400-26600 on a break past 24200. Nikkei and Shanghai can rise towards 51000-52000 and 4000-4100 respectively.

Crude prices remains strong. Brent is supported by geopolitical risks and aiming for $63–$64, while WTI has broken above $58 and can test $60. Gold is extending its uptrend towards $4600–$4650. Silver remains strong with upside towards $73–$74. Copper is holding near the upper end of the $5.3–$5.6 range and may stay range-bound. Natural gas has dipped after a sharp weather-led rally, but above $3.80 a bounce towards $4.20–$4.40 is still possible.