Morning briefing: Euro has already broken below 1.1400 and can now fall towards 1.1300

Vikram Murarka Kshitij Consultancy Services

The Dollar index needs to break above 101.5 to slowly move up further while the Euro has already broken below 1.14 and can now fall towards 1.13. EURINR can test 107.77-107.50 before bouncing from there while EURJPY may bounce from 183. USDJPY may hold below 162 with immediate downside limited to 161/160. USDCNY has risen well and can test 6.80 before pausing there again for a dip. Aussie looks bearish to 0.69 while Pound needs to bounce from 1.32 to avoid further decline from here. USDINR may test 95/95.10 before facing rejection from there to fall towards 94.75/50.

The US Treasury Yields have bounced back from their support for the second consecutive day. That keeps intact our overall bullish bias. The yields can rise more in the coming days. The US PCE data release tomorrow will need a close watch. Need to see if it can provide the necessary push for the yields to rise. The German Yields have come down further. The outlook is negative. They can fall more from here. The 10Yr GoI is coming down as expected. It can fall more to test its support and then rise back again.

Global equities have come under pressure following a sharp regional sell-off in Asia, led by a steep decline in South Korea's KOSPI and renewed concerns over the technology and AI sectors. Dow and DAX remain capped below key resistance levels and are vulnerable to declines towards 51000-50000 and 24500 respectively. Nifty has slipped below 24000 and can fall further towards support near 23600, while Nikkei may test the 68000-67000 region before a bounce back is seen. Shanghai is also correcting from recent highs but remains constructive while support near 4070-4050 holds, keeping alive the possibility of a rebound towards 4200.

Commodities continue to weaken in line with expectations. Brent and WTI remain bearish and can decline further towards $75-$70 and $70-$65 respectively. Gold has broken below $4100 and can test $4000 before a reversal is seen, while Silver continues to slide towards $60. Copper has turned significantly weaker after breaking below key support and now has room to decline further towards $6.00-$5.75. Natural Gas remains range-bound and is likely to trade within the broader $3.00-$3.50 range for some time.

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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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