Morning briefing: EUR/USD targets 1.1200 amid bearish outlook

Vikram Murarka Kshitij Consultancy Services

The Dollar index has seen a pull back but could be limited to 101.50-101 before again resuming the upmove while Euro is bearish below 1.13 and can see trade between 1.13-1.12 in the near term before eventually breaking lower. USDJPY can see a slow rise to 159-160 while EURJPY can test 180/181. EURINR could trade between 107.50-109 region for the next couple of weeks while the USDINR has scope to test rise towards 96.75/97.00 on a decisive break above 96.50. Crucial trigger for the rise would be a sustained rise in crude oil prices above $100. RBI monetary policy is due today where the market expects a 25bps rate hike which is already priced in. A surprise “no change” in the rates could bring in some weakness in the Rupee beyond 96.50. Else if the 25bps rate hike happens as expected, we could see a stable USDINR below 96.50 today also.

The US Treasury Yields hold higher. Outlook remains bullish and the yields can rise more from here. The German Yields have dipped slightly. Failure to rise back immediately can drag them further lower to test their support. Thereafter the broader upmove can resume. The 10Yr GoI sustains higher. Outlook is bullish. It has room to rise further from here. The RBI’s monetary policy outcome today will need a close watch.

Dow can test 52000, but a pullback looks likely thereafter. DAX needs to break 25500 for 25800-26000, otherwise it can fall towards 25000. Nifty remains positive above 22600 and can rise towards 23000. Nikkei remains bullish towards 72000 while above 70000. Shanghai resumes trading on October 8.

Brent and WTI remain positive above support and can rise towards $105-$110 and $95-$100. Gold needs to sustain above $4100 for a rise towards $4300-$4400, otherwise it can fall towards $4000. Silver needs to hold $60 for a rise towards $63-$65. Copper can rise towards $6.75-$6.80, while Natural Gas can rise towards $3.15-$3.20.

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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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