Morning briefing: Euro can continue to trade within 1.0350/1.0500

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is holding above support at 107.75 and can rise towards 109-109.50. On the other hand, Euro, EURINR and Aussie will have to decisively break on either side of the respective ranges for further directional clarity but until then can continue to trade within 1.0450/0550-1.0350/0300, 89.50/90.00-88.00 and 0.6300-0.6200 respectively. The pound faced rejection from 1.26 as expected. A rise past 1.2650 will be needed to rise further, else it can test 1.25, while below 1.2650. USDJPY is coming off and if the fall extends further, a test to 155-154 can happen in the coming sessions. EURJPY has slipped below 164 and can test the support at 162 soon. USDCNY is oscillating below the target of 7.30. While it trades above 7.25, the overall view is bullish towards 7.35. USDINR rose to the level of 85.5925 yesterday. For now, our view remains intact of the pair sustaining below 85.65 for this week and extending the fall to 85.40/35. Watch out for the US Case Schiller Data release scheduled today.

The US Treasury yields have come down sharply. But supports are there to limit the downside. We expect yields to sustain above their support and rise back to keep the uptrend intact. The German yields have dipped slightly. A strong rise above the immediate resistance is needed for the yields to see an extended rise. Else they can fall back. We will have to wait and watch. The 10Yr GoI seems to be struggling to rise. It looks vulnerable to break the immediate support and resume the downtrend.

The Dow Jones took a nosedive to a low of 42263 before easing off above 42500. Further fall towards 42000-41800 looks possible. DAX closed lower. While below 20100-20200, it looks bearish towards 19500. Nifty slipped and closed near the lower end of the range of 23600-24000. A break below 23600 would take the index down to 23000. Nikkei is closed today. Shanghai trades around 3400. The immediate view remains mixed and could hold the range of 3350-3450.

Brent and WTI continue to rise and while the immediate resistances hold, they can continue to trade within the range of 75.0-73/72.5 and 72-69 respectively. Gold must break either side of the range to get clarity on further movement. Whereas, Silver and Copper can trade within the range of 29.0-30.5 and 4.15-4.05 respectively for some time. Natural Gas needs a sustained break above 4 to be bullish towards 4.4-4.6.

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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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