Morning briefing: Euro can attempt to rise back towards 1.1100-1.1200
The Dollar Index is coming off from the level of 103.5. A confirmed break below 102 can make it bearish to 101-100. The Euro above 1.09/085 can attempt to rise back towards 1.11-1.12. EURINR is trading higher within its range of 93-95. USDJPY and EURJPY can trade within 148-144 and 160-164 region respectively. AUDUSD needs a sustained rise past 0.61 to negate a fall below 0.60. The USDCNY is rising as expected and can soon test 7.35 as well. Pound tested the support near 1.27 and while it holds, it can again attempt to rise towards 1.29-1.30. USDINR is rising in line with our view and can extend it further to 86.0-86.4 in the coming weeks.
The US Treasury yields have risen back sharply. But need to see if they are getting a strong follow-through rise from here or not. Resistances are there to cap the upside. While the resistances hold, the broader bearish view will remain intact, and the yields can fall back again. The US CPI data release tomorrow will be important to watch. The German yields have risen back and keep alive the broader bullish view. A fall below the immediate support will only negate the bullish view. We will have to wait and watch. The 10Yr GoI remains stable and lower. There is not much room left on the downside. We expect the yield to hold above its immediate support and rise back in the coming days. The RBI monetary policy meeting outcome is due tomorrow.
The Dow Jones recovered from a low of 36611. A rise past 38200 would be bullish for the index towards 40000. Similarly, DAX and Nifty fell to a low of 18490 and 21743, and recovery was seen above 19700 and 22100, respectively. DAX , while above 19500, looks bullish towards 20500. Nifty, while above 21700, can march towards 22800-23000. Nikkei and Shanghai also recovered from lows at 30792 and 3040. Nikkei looks bullish towards 36,000. Shanghai has the potential to rise towards 3150-3200; it needs a rise past 3120 to confirm the bullishness.
Brent and WTI continue to look weak with more downside likely in the coming weeks. Gold dipped below $3000 but has bounced back; needs to sustain above $3000 to stay bullish. Silver stays bearish below $32. Copper is at a crucial support; holding above can lead to a bounce, else a deeper fall is possible. Natural Gas is holding support and can rise slightly in the near term.
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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.
