Morning briefing: Euro can fall back towards 1.1150-1.1100 in the near term
The Dollar Index did not see much reaction despite the release of stronger US Consumer Confidence and Case Chiller data. Immediate support is at 100.5 which needs to hold to produce a bounce back towards 101-101.50. Euro can fall back towards 1.1150-1.11 in the near term while below 1.12. USDJPY needs to rise past 145-146 to turn bullish again while EURJPY can remain ranged within 160-164 for a while. The pound for now is holding well below our mentioned resistance of 1.3250 and unless a strong break past it is seen, it is likely to fall towards 1.31 or lower. Aussie is oscillating around the crucial level of 0.68, a break past which if seen can take it higher to 0.6850. Watch price action closely around the current levels. USDCNY needs to sustain above 7.12 to rise back towards 7.18. EURINR can fall back towards 93-92 in the coming sessions while below 94. USDINR may continue to trade within 84.00-83.75 region for the near term.
The US Treasury yields are holding on to the bounce. However, resistances can cap the upside if there is more rise from here. The broader trend is down, and the yields are likely to reverse lower again. The German yields are on a corrective rise. There is room to move up further before the overall downtrend resumes and the yields fall back again. The 10Yr GoI is attempting to rise. Key resistances are ahead to restrict the rise and drag the yields lower again.
Dow Jones and Nifty have scope to rise towards 41800-42000 and 25500 while above the support at 40800 and 24500. DAX is showing signs of breaching above the resistance and target further upside. Nikkei is stuck in a narrow range but has scope to eventually break on the upper end of the range. Shanghai hovers above 2840 but outlook remains bearish for a fall towards 2800.
Crude prices fell sharply on Tuesday after Goldman Sachs cut its 2025 Brent crude forecast to $77 a barrel from earlier estimate of $82 per barrel but have immediate supports which may hold and produce a bounce back. Gold, Silver and Copper lacks a follow through rise but still have scope to rise towards 2600, 31-31.50 and 4.4 respectively. Natural gas has been falling but downside might be limited to 2.0-1.9.
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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.
