Morning briefing: EUR/USD trades lower within 1.0950-1.0800 range

Vikram Murarka Kshitij Consultancy Services

The Dollar Index if sustains above 104, can head towards the resistance near 105.25-105.50. The Euro is trading lower within its range of 1.095-1.080. A strong break below 1.08 can drag it towards 1.705-1.070. EURINR has immediate support around current levels. Need to see whether it holds or not. USDJPY has risen past 150, contrary to our view and now if sustained, can rise towards 152 or higher. The USDCNY needs to see a strong break past 7.27 to rise towards 7.30, else the range of 7.22-7.26 can continue to hold. AUDUSD & Pound can trade within respective ranges of 0.64-0.62 and 1.30-1.29 in the near term. EURJPY is rising as anticipated and above 160, can attempt to rise back towards 164. USDINR fell below the support near 85.70 and now we will have to see whether it bounces back from 85.50 or extends the fall below it. US Case Schiller, US Consumer Confidence & US New Home Sales data releases are scheduled today.

The US Treasury yields have risen well. A further rise to test the next resistance is a possibility. But unless that resistance is broken, there is no change in our view of seeing a fall in the yields going forward. Broadly the trend is down. The German yields remain stable. Outlook is bullish. Any dip from here will be limited. The 10Yr GoI remains lower. There is limited room on the downside. There are good chances for the 10Yr GoI to reverse higher after testing its upcoming support.

The Dow Jones surged above 42200, negating the bearish view, and looks bullish towards 43300-43500. DAX can test the lower end of its 22200-23500 range. Nifty faces resistance overhead near 23700-23800. Watch for price action near the resistance to determine the further view. Nikkei is trading slightly below 38000 and needs a sustained rise past 38000 to negate the fall towards 37000. Shanghai is holding above the support of 3350 and can rise towards 3400-3450.

Brent and WTI have broken higher and may rise further. Gold and silver continue to decline, with downside targets of $3,000-$2,950 and $33.00-$32.50, respectively. Copper needs to stay above $5.12 to remain bullish; otherwise, it may drop to $5.05-$5.00. Natural gas remains weak below $4.00, with further downside possible.

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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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