Morning briefing: Euro can trade within the 1.0775-1.0850/09 range
The Dollar Index failed to sustain its rise past 104.50 and declined a bit from there. US Case Schiller and Consumer Confidence scheduled today might bring some volatility to see whether the index will extend the fall or test 105-105.50 initially before coming down towards 103-102.50. Euro, Pound, and EURINR can trade within the respective ranges of 1.0775-1.0850/09, 1.2900-1.3150, and 90.50/90-91.50 in the near term. The expected rise in USDJPY and EURJPY to 155 and 168 cannot be fully ruled out until a strong break below current levels is seen. Aussie could be headed towards 0.65, while below 0.66. USDCNY looks a bit uncertain for now but has room on the upside towards 7.1436 and 7.1751. Failure to sustain above current levels can drag it down towards 7.10 or even lower. USDINR is likely to remain ranged between 84.00 and 84.12 for the week.
The US Treasury and the German yields remain higher but stable. The Treasury yields have room to rise further from here to test their resistance. After that the broader downtrend can resume. The German yields remain bullish and can rise more. The 10Yr GoI has risen, breaking its range on the upside as expected. The broader bullish view remains intact. The 10Yr GoI can rise further.
Global equity indices closed higher. The Dow Jones and DAX have sustained above 42000 and 19400, respectively, and advanced above 42300 and 19500. To sustain the upward momentum, further gains beyond 42600 for the Dow and 19600 for the DAX would be needed to reach targets around 43000 and 19800-20000. Nifty saw a relief rally, breaking above 24100; a follow-through rise past 24600 is required to mitigate the fall towards 24000 or lower. Nikkei has risen and sustained above 38500 and looks bullish towards 39500-40000. Shanghai extended higher to 3340 before easing off and is holding yesterday's mentioned range of 3250-3350 so far.
Crude prices fell sharply below their immediate support levels after Israel’s attack avoided Iranian crude oil facilities. They can now fall further towards their interim support levels of 68 on Brent and 65 on WTI for the near term. Gold and Silver can target 2780-2800 and 35.0-35.5 respectively in the near term. Copper can trade within the narrow range of 4.4-4.3. Natural Gas can fall back to 2.5-2.2 while below 3.
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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.
