Morning briefing: Euro can trade within 1.1800-1.1400 region

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has remained stable since the last few sessions. The view remains intact to see a rise towards 101, while above 98/97. The Euro and EURINR can trade within 1.18-1.14 and 102-100/99 regions respectively. EURJPY has limited upside to 172. The target of 168 is kept open for now. USDJPY above 146 can target 149-150 in the near term. USDCNY is holding its 7.14-7.20 range for now. The Aussie is consolidating within 0.64-0.65 region, while the Pound is heading towards the resistance at 1.34. USDINR tested 87.8825. Still, while below 88, a dip to 87.50 looks possible. Only a confirmed break past 88 if seen can bring higher levels into picture.

The US Treasury yields remain lower but stable. Any bounce from here can be capped. The yields are likely to fall more in the coming days. The German yields are also lower and stable. They have support to limit the downside. We can expect them to reverse higher and keep the bullish view intact. The 10Yr GoI retains its sideways range and can rise within that. The RBI meeting outcome tomorrow will be an important event to watch.

The Dow Jones dipped after a flat ISM services data yesterday that triggered concerns of a stagflation. While above support at 43000, Dow has scope for a slow rise towards 44500-45000. The Dax moved up yesterday and while above the support zone of 23000-23500, the index can slowly rise towards 24000-24500. Nifty declined as expected but while above supports at 24400-24600, Nifty can slowly rise towards 25000 in the medium term. Nikkei and Shanghai are trading higher and while above supports at 40000 and 3550, we may expect a rise towards 41000-42000 and 3650-3700 respectively.

Brent and WTI are testing their immediate supports, and a sustained break below could turn them bearish towards $66–$64 and $64–$62 respectively. Gold remains under resistance with a possible pullback to $3350 unless it breaks above $3450, which would turn it bullish towards $3600–$3700. Silver continues to rise and may reach $38–$40, while Copper has dropped below $4.4 and could fall to $4.3–$4.2. Natural gas stays above $3.0 but retains a bearish outlook towards $2.8–$2.7.

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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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