Morning briefing: Euro can test 1.1800 or slightly higher before retracing from there

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has dipped and could test 98/97.50 before bouncing higher while Euro can test 1.18 or slightly higher before retracing from there. EURINR is likely to head towards 112-112.50 while above crucial support at 110. EURJPY can rise towards 187.50 while above 186.25 but USDJPY is likely to remain range bound within the 157.50-160.50 region. USDCNY has scope to test 6.855 while above 6.81. Pound can be headed towards 1.3575 before falling back towards 1.35/34 while Aussie can test 0.72/0.7250 before declining from there. USDINR has crucial resistance at 94.35 below which we may expect a pull back towards 94.00-93.75.

The US Treasury Yields are struggling to break their resistance. That can continue to keep then inside the current sideways range. Need to wait for the bullish breakout to happen. We will have to wait and see if the Fed meeting on Wednesday is providing the needed trigger for this bullish breakout. The German Yields are coming down. There is room to fall more before the broader upmove resumes. The 10Yr GoI has failed again to sustain the breakout. It can continue to oscillate in a sideways range for some more time.

Dow is slipping gradually and can decline towards 49000-48500, while DAX may test 24000 in the near term. Nifty remains vulnerable and needs to hold above 23800 to avoid a deeper fall towards 23600-23400. Nikkei has turned strongly positive after breaking above 60000 and can rise further towards 61000-62000. Shanghai continues to weaken and may test 4000 before any rebound.

Crude prices remain firm but highly volatile amid continued Middle East uncertainty. Brent can rise towards $110-$115, while WTI may test $100 in the near term. Precious metals may see further correction first, with Gold likely to dip towards $4600 and Silver towards $70 before any bounce back. Copper remains positive above $5.80 and can rise towards $6.15-$6.20. Natural Gas may continue to trade within the $2.80-$2.55 range for now.

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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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