Morning briefing: Euro could limit its immediate upside to 1.1600

Vikram Murarka Kshitij Consultancy Services

Joint US-BOJ intervention has pulled down the Dollar Index and USDJPY sharply and continues to keep the major currencies highly volatile. Supports are seen near 99.50 and 154.60, respectively, which are likely to hold and produce a decent bounce in the near term. Euro could limit its immediate upside to 1.16. EURJPY has plunged to 179.37 too but has moved up above 180 now. Trade above 180 needs to sustain to avoid further decline towards 175. USDCNY is open to see a slow fall towards 6.70 while below 6.7850. Aussie and Pound could attempt to test 0.71 and 1.3550 before falling in the medium term. USDINR could test 95.15/95.00 today.

The US Treasury Yields have come down in the early trades as the oil price has come down. But support is there to limit the downside on the yields. The bias is bullish. The yields have room to rise more. The German yields are going up in line with our expectation. Our bullish view remains intact. The 10Yr GoI is holding well above its support. That keeps the upside open to rise more before resuming the broader downtrend.

Dow continues to trade below the key 53000 resistance and remains vulnerable to a decline towards 51000-50000. DAX is testing the crucial 26000 level, with a break higher opening the way towards 27000, while failure could lead to a pullback towards 25000. Nifty may witness a short-term dip towards the 21-day moving average near 24150 before seeing a bounce back towards 24500. Nikkei has turned weaker after failing to break above 66000 and can decline towards 61000-60000. Shanghai is likely to remain range-bound within the 3750-3900 band for some time.

Brent and WTI are likely to remain within the $80-$100 and $75-$95 ranges respectively until clearer directional cues emerge. Gold can continue to trade within the $4000-$4200 range, while Silver is likely to remain range-bound between $55 and $60. Copper remains bullish and could extend its rally towards $6.70-$6.80 on a sustained break above $6.60. Natural Gas continues to trade sideways but remains vulnerable to a decline towards $2.65 in the near term.

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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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