Morning briefing: EUR/USD sees near-term weakness against the US Dollar

Vikram Murarka Kshitij Consultancy Services

Fresh demand for the dollar ahead of the US CPI data release today has led to a decline in other major currencies against the US Dollar. Aussie, Pound, Chinese Yuan, Indian Rupee and the Euro see near-term weakness against the Dollar, while EURINR is rising towards 112. USDJPY and EURJPY have risen, but the rise could be temporary, and the two pairs could start declining again in the medium term. USDINR, while above 95.50, could aim to test 96.0-96.50 on the upside.

The US Treasury Yields have risen sharply. A surge in Crude Oil price has taken the yields higher. If the momentum sustains, then the yields can rise further in the coming days. The German Yields have also risen sharply. They have room to rise further. Outlook remains bullish. The ECB raised their policy rates by 25bps in its meeting yesterday. The 10Yr GoI is inching up. That keeps intact our overall bullish view of seeing more rise.

Dow remains weak near 52000, with a break below this level opening the way towards 51000-50000. DAX can decline towards 25000, while Nifty remains vulnerable towards 23000 below 23500. Nikkei has weakened below 64000 and can fall towards 63000-62000. Shanghai is testing 3850 support amid Middle East tensions, with a break below it opening 3800-3750.

Brent and WTI have surged amid escalating Middle East tensions, with further gains towards $115 and $110 possible. Gold needs to hold above $4300 to retain upside potential towards $4600. Silver remains weak and can decline towards $60. Copper has plunged after tariff concerns eased, leaving it vulnerable towards $6.40. Natural Gas remains range-bound between $2.80-$3.00 while above $2.80.

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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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