Morning briefing: Euro can be vulnerable to extend the fall towards 1.1500-1.1400

Vikram Murarka Kshitij Consultancy Services

The Dollar Index needs to see a confirmed break past 99 to head towards 100-101 in the near term. While below 1.17, Euro can be vulnerable to extend the fall towards 1.15-1.14. EURINR is trading near the lower end of its 105-103 range. If the ongoing rise sustains, EURJPY can target 178-180, and USDJPY can target 154-155 in the near term. USDCNY for now can consolidate between 7.10-7.15 region. The Aussie and Pound are expected to trade within 0.655-0.665 & 1.33-1.35 region respectively before a breakout occurs. USDINR continues to remain stuck within 88.60-88.80 region.

The US Treasury yields have dipped further and are at their key support. Failure to rise back from here will negate the rise that we had expected. It will then drag the yields lower. The German yields are coming down in line with our expectation. They can dip further to test their support and then rise back again to keep the broader uptrend intact. The 10Yr GoI is oscillating around its support. It has to get a strong bounce from here to go up and avoid falling more. We will have to wait and watch.

The Dow looks stable and can fall to 46600-46500 before bouncing from there. The Dax has risen well and upon sustained rise past 24600, a test of 25000 looks possible. The Nifty has been stable. If it breaks below 25000, it can get dragged back into the 24800-24600 zone. Watch price action near 25000. The Nikkei seems to be gradually rising towards 50000. Shanghai has opened today after a week long holiday and trades in the green. A rise past 3900 can take it to 4000.

Brent and WTI have both reversed lower after testing resistance near $67 and $63 respectively, keeping the short-term outlook bearish towards $64 and $60, with potential for deeper declines if these supports break. Gold and Silver continue to show strong bullish momentum, with Gold holding firm above $4000 and likely to rise towards $4100-4200, while Silver, after hitting a record high of $49.20, could extend gains to $49.50-50.00 if it stays above $48. Copper remains firm and can move towards $5.15-5.20, whereas Natural Gas has weakened sharply and may fall further towards $3.25-3.20 as long as it stays below $3.5.

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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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