Morning briefing: Euro can trade within the 1.16-1.1670 region

Vikram Murarka Kshitij Consultancy Services

Amidst the peace deal talks, Iran seems to be stuck on some key issues before arriving at a final agreement. This is keeping the Dollar Index strong above 99, preventing too much of optimism from seeping into the currency prices at the moment. In such a scenario, the Dollar Index can remain stable above 99 while Euro can trade within the 1.16-1.1670 region. EURINR, EURJPY and USDJPY look bullish for the near term towards 111.80-112, 187/188 and 160-161, respectively. USDCNY can trade within 6.78-6.80 region for now. A break below 6.78 could trigger a decline to 6.76/75. Aussie and Pound can trade within 0.71-0.72 and 1.34-1.35, respectively, while Rupee saw weakness towards 95.69 yesterday and may continue to weaken towards 96.00-96.35.

The US Treasury Yields are coming closer to their key support. There is limited room on the downside. We expect the yields to sustain above their support and rise back going forward. The German Yields have bounced but may not sustain. We expect them to fall more before resuming their broader upmove. The 10Yr GoI has dipped below a crucial level. Failure to rise back immediately can drag it further lower in the coming days.

Dow tested 51209 in line with expectations and while above 50000, the broader outlook remains bullish towards 51500-52000. DAX has corrected slightly, but while above 25000, it can still rise towards 26000. Nifty failed to hold above 24,000 and may decline further towards 23,800-23,600 while remaining below this resistance. Nikkei continues to remain strong above 64000 and can rise further towards 66000-66500. Shanghai needs a sustained break above 4160 to strengthen further towards 4250, else it risks falling back towards 4050 or lower.

Brent and WTI remain weak and can decline further towards $95-$90 and $90-$85 respectively in the near term. Gold and Silver continue to hold a bearish outlook towards $4400 and $70 unless they see sustained breaks above $4600 and $80 respectively. Copper remains positive while above $6.25 and can rise towards $6.60. Natural Gas is holding above the key $3 support and can extend gains towards $3.20-$3.25 in the coming sessions.

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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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