Morning briefing: Euro could face rejection from 1.0350-1.0400 region
The Dollar Index can test the resistance coming around 110-111 region in the near term while above 108.00-108.50. Euro could face rejection from 1.0350-1.0400 region. EURINR and USDJPY can trade sideways between 88-89/90 and 156-158 respectively for the near term. Pound and EURJPY have risen past 1.24 and 162 again. EURJPY can head towards 164-165, while Pound has limited upside to 1.25-1.26. Aussie looks stable above 0.62 but immediate upside could be capped at 0.6250-0.6300. USDCNY has finally risen past 7.30 and can now head towards 7.35 soon. USDINR can test 86 on the upside on a confirmed break past 85.80. The downside for the week is expected to be limited to 85.70/65.
The US Treasury yields have risen sharply. The bullish view is intact. There is room for the yields to rise more from here. The German yields have entered their crucial resistance zone. A strong breakout is needed in the coming days to see an extended rise and avoid falling back. Wait and watch. The 10Yr GoI is coming down. While it remains below its resistance, more fall can be seen in the coming days.
The Dow Jones has risen well above 42700 but remains bearish while trading below 43500, with downside targets of 42000-41500. DAX failed to sustain above 20000 and needs a break above 20200 to advance toward 21000. Otherwise, the index may drop to 19500. Nifty closed lower but held above 24000. As long as it sustains above 24000-23800, it retains the potential to rise toward 24500. Nikkei has declined below 39500 and could fall further within the 40000-38000 range, targeting 39000-38500. Shanghai dropped to a low of 3185 before recovering slightly. A rise above 3250 is essential to eliminate downside risks.
Crude prices have rallied higher as expected due to weaker Dollar and US economic strength. Immediate resistance levels can be tested in the near term before a fall to 75-74 (Brent) and 73-72 (WTI) takes place. Gold, Silver and Copper can target 2700-2750, 30.5-31.0 and 4.10-4.15 respectively on the higher side. Natural Gas remains bullish towards 3.8-4.0 while above 3.4/3.3.
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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.
