Morning briefing: Euro can fall towards 1.1500-1.1400

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is trading higher within its 96-99 range but we maintain our bullish bias towards 101. The Euro and EURINR can fall towards 1.15-1.14 and 99-98 respectively. EURJPY above 172 has a scope to rise towards 175 in the near term. USDJPY and USDCNY have the scope to rise towards 150 and 7.20 or even higher levels, while they trade above 147/46 and 7.16 respectively. The Aussie and Pound on a break below 0.645 and 1.34 can get dragged towards 0.6400-0.635 and 1.32 or even lower respectively. USDINR if sustained above 86, can head towards 86.50 in the near term.

The US Treasury yields are coming down to test their support. We expect the support to hold and the yields to reverse higher going forward. The German yields have risen back. That keeps intact our bullish view. The yields have room to rise more. The 10Yr GoI remains stable around the lower end of its narrow range.

The Dow Jones can remain ranged between 44000-45000 while the Dax needs to sustain above 24500 to move higher else can decline to 24000. Nifty closed below 25000 last week and unless it bounces back higher today, it could become vulnerable to fall towards 24809-24600. Nikkei has tested the upper level of our expected 39000-40000 range and could now decline towards 39500-39000. Shanghai has risen well and can target 3550-3600 while above 3500.

Crude prices remain supported as long as key levels hold, with Brent targeting $72–$74 and WTI aiming for $70–$72. Gold is expected to move towards $3400-3,450 and Silver towards $40-41. Copper is rising steadily, targeting $5.80, while Natural gas has weakened below $3.50 and may decline further towards $3.30 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.

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