Morning briefing: Euro has resistance between 1.1150 – 1.1200, suggesting a limited upside

Vikram Murarka Kshitij Consultancy Services

The Dollar Index tested 100.58 as expected before rising back from there. A break below 100.5 can bring 99.5 into the picture. Euro has risen well but has resistance between 1.1150-1.12 which suggests a limited upside for the pair. USDJPY and EURJPY look bearish towards 139-138.40 and 154-152 respectively. Aussie and Pound may head towards 0.68/6850 and 1.33-1.3350 respectively. USDCNY could extend its fall to 7.05/02 on a break below 7.08, if seen. EURINR has risen past 93 but needs to sustain to rise towards 93.50/94 else can fall back towards 92.40-92.00. USDINR can continue to trade between 83.80 and 84.00. Important US data releases scheduled today are Retail Sales, Industrial Production and Capacity Utilization. Tomorrow we have the FED policy meeting.

The US Treasury yields continue to fall as expected. The downtrend is intact, and the yields can fall more. The US Fed meeting outcome tomorrow will be important to watch. A 25-bps rate cut is already factored in the market. The expectations are now increasing to get a 50-bps rate cut tomorrow. We will have to wait and watch. The German yields have turned down again after a short-lived bounce. That keeps intact the broader downtrend. The yields can fall more in the coming days. The 10Yr GoI is coming down towards our expected level. Of 6.75%. A corrective bounce is possible before the fall extends beyond 6.75%.

Dow Jones is heading up towards its crucial resistance zone which if holds can lead to fall from there. Key focus is on the FOMC meeting tomorrow where the central bank is expected to deliver a rate cut of 25bps or 50bps. DAX has to breach 18700 to become further bullish or else there could be danger of falling back again to 18400-18300. Nifty remained stable below 25450 but bias is positive to see a break above it and rise to 25700-25800. Nikkei may trade sideways below 37000 for a while.

Brent and WTI have risen back but needs to rise past the resistance at $74-75 and $71-71.50 respectively to turn further bullish or else they may trade sideways for a while. Gold is hovering below its key resistance. Need to see if it breaks above it or fallback from there. Silver, Copper and Natural Gas have scope to rise towards 32.00-32.50, 4.4-4.5 and 2.4-2.5 respectively.

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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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