Morning briefing: EUR/USD remains stuck within the 1.1670-1.1580 range

Optimism around a 60-day ceasefire extension agreement between US and Iran is keeping Dollar Index slightly lower but still within the broad 98.90-99.55 range. Euro remains stuck within 1.1670-1.1580 while EURINR has scope for a rise to 112-112.50 before facing a rejection towards 110.5-110. EURJPY and USDJPY look bullish for the near term towards 186.50 and 160-161, respectively. USDCNY is headed towards 6.75. Aussie and Pound can trade within 0.71-0.72 and 1.3350-1.3550, respectively. USDINR will have to dip towards 95.50-95.25 else would turn bullish towards 96+.

The US Treasury Yields have come down to their support. An immediate bounce from here can take them higher and will avoid an extended fall. The US PCE, the Fed inflation gauge, surged to 3.77% (YoY) in April, up from 3.53% a month ago. Higher inflation will keep the doors open for rate hikes this year. That will be positive for the yields. So, any fall in the yields from current levels can be limited. The German Yields have turned down as expected. They can fall to test their support first and then resume their upmove. The 10Yr GoI has bounced. But resistance can cap the upside. It can fall more while it remains below the resistance.

Dow is stuck between 50300 and 50850. The bias is positive to get a bullish breakout of this range and a rise to 52000. DAX is likely to fall more in the near-term which can delay the rise to 26000 that we are expecting. Nikkei has risen back sharply. The bullish view is intact to see 66000-66500 on the upside. Shanghai is holding above its support. But a sustained rise above 4160 is needed to negate the danger of breaking below 4050. Nifty has to rise above 24100 to become bullish. A break below 23950 on the other hand can drag it lower.

Crude prices have declined sharply as the US and Iran agree for a 60-day ceasefire extension deal, awaiting Trump’s approval. Brent and WTI have scope to test $85-84 and $80 respectively before bouncing higher in the medium term. Gold and Silver have risen and could head towards $4600 and $80, respectively while Copper remains positive and can rise towards $6.60. Natural Gas has risen well breaking our expected $3.25 and can head towards $3.5 or higher soon.