Morning briefing: EUR/USD stays rangebound between 1.1600–1.1800
The Dollar Index is holding below key resistance at 99 with scope for a pullback towards 98–97 before targeting 100–101, while EURUSD stays rangebound between 1.16–1.18 unless a break below 1.16 extends losses to 1.15–1.14. EURINR is likely to bounce within 101–102.50, and EURJPY must clear 173 to strengthen towards 174–175 or else risk slipping to 170–169. Dollar-Yen looks bullish towards 150–151, USDCNY faces resistance at 7.19 with potential to fall back to 7.16, and Aussie could test 0.64 before rebounding to 0.6450–0.65. The Pound is supported above 1.34 with room for a rise to 1.3450–1.35, while USDINR remains capped below 87.50 and stays vulnerable for a decline towards 86.75–86.50.
The US Treasury yields have bounced back. The support zone is holding well as expected. That keeps intact our view of seeing a rise. The Fed Chairman Jerome Powell’s speech at the Jackson Hole meeting today will be important to watch. The German yields have bounced back but are unlikely to sustain. They can fall back and test their support. The 10Yr GoI has risen back again. There is room to rise in the near term. But strong resistance is there to cap the upside and take it lower again.
The Dow Jones could trade below 45200-45000 and unless a strong follow-through rise is seen above the mentioned zone, we may expect a fall to 44500-44100 initially. Dax continues to trade within 24500-23500, both being crucial resistance and support levels. Nifty needs to breach 25250 in the near term; else, a decline back towards 24700 can be seen. Nikkei could decline towards 42000-41000 initially before rising to 44000-46000 over the medium term. Shanghai looks strong towards 3800-4000. 4000 is a strong resistance.
Crude prices are gaining as a sharp fall in US crude and gasoline inventories along with strong global manufacturing data boosts sentiment, with Brent eyeing $68–69 and WTI $64–65 before turning lower again. Gold looks set to rise towards $3,400–3,450 while above $3,350, and Silver must hold above $38 to extend its move towards $39–40. Copper continues to trade in the $4.30–4.50 range awaiting a breakout, while Natural gas has rebounded from $2.70 support and can head towards $2.85–2.90.
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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.
