Morning briefing: Euro could limit its dip to 1.1500

Vikram Murarka Kshitij Consultancy Services

The Dollar index is poised to see a limited rise before a corrective decline sets in which indicates limited strength for the other major currencies against the dollar. Euro could limit its dip to 1.15 while EURJPY and USDJPY can continue to rise towards 180.50 and 157 respectively. EURINR is bullish to 112 while above 110 but USDCNY has declined sharply and seems to resume its fall towards 6.70. Aussie and Pound can test 0.71-0.7050 and 1.3450 before rebounding from there. USDINR is bullish for a rise to 96.00-96.50 before a corrective decline can be expected.

The US Treasury and the German Yields sustain higher. Both the yields remain bullish. They can rise more from here. The US Federal Reserve meeting outcome will need a close watch. Expectations are high for the Fed to increase the interest rates by 25 bps today. We will have to wait and see. Also, their economic projections that will be released today will need a close watch. The 10Yr GoI has risen sharply to touch 7.1% much faster than expected. There is some more room to rise. But thereafter there are chances to see the yield reversing lower.

Dow remains range-bound between 52000-53500 for now. DAX remains vulnerable to a decline towards 25000 after breaking below 25300. Nifty has weakened sharply and can decline towards 23000 in the near term. Nikkei remains weak below 65000 and can fall towards 63000-62000. Shanghai is testing 3850 support, with a break below this level opening the way towards 3800-3750.

Brent and WTI continue to rise and can break above $110 and $105 respectively. Further gains towards $115-$120 and $110-$115 remain possible. Gold remains weak near $4300 and needs to hold this support for recovery towards $4500-$4600. Silver remains vulnerable towards $60, while Copper can decline towards $6.25-$6.00. Natural Gas may face resistance near $3.00, keeping the $2.80-$3.00 range intact.

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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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