Morning briefing: EUR/USD weakens ahead of the ECB policy meeting

Vikram Murarka Kshitij Consultancy Services

The Dollar Index trades above 102, and the Euro weakens ahead of the FED (today) and ECB (tomorrow) policy meetings. The Fed is expected to keep rates unchanged. Dollar-Yen and EURJPY could rise to 158/159 and 177/178, respectively, while EURINR may trade between 105.70 and 107 with some chances of a dip to 105. The pound needs to hold above 1.33 to prevent a decline to 1.32 but the fall may look more likely as the US Dollar seems to hold strong. The Aussie is stable, and USDCNY looks weak towards 6.65. USDINR could reach 95.50 this week, though a break higher remains uncertain and a pullback is possible.

The US Treasury and the German Yields remain stable. The Treasury Yields are likely to go up eventually. But it is not clear whether the expected rise can happen from here itself or after some more dip. We will have to wait and see. The US Fed meeting outcome tonight will need a watch. The German Yields on the other hand can fall more and test its support. Thereafter a fresh rise can happen. The 10Yr GoI has come down after testing the resistance as expected. We can expect a corrective fall going forward. Any bounce from here can be capped.

Dow needs to hold 52000 to extend the rise towards 53000 or higher, else it can fall towards 51000. DAX can extend the rise towards 25800 if the rally sustains. Nifty needs to hold 22700 for a rise towards 23000, else it can fall towards 22350-22250. Nikkei has immediate support at 62500, with the rise extending towards 64000. Shanghai remains weak, with scope to fall towards 3600-3500.

Crude oil contracts have rolled over to new front months. Brent ($108 support) and WTI ($98 support) are holding key levels for potential bounces toward $112–$115 and $100–$102. Gold's modest recovery could target $4,200 if $4,000 holds, while Silver remains biased toward $50 as long as resistance at $55–$56 caps gains. Meanwhile, Copper approaches $6.70 with room for further upside, and Natural Gas continues to range-trade within $2.7–$3.2.

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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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