Morning briefing: Euro has scope to rise to 1.1800/1.1850

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has dipped within 99-98 region while Euro has scope to rise to 1.18/1.1850. The EURINR is likely to rise towards 112-112.50 while the EURJPY and USDJPY may attempt to rise after a sharp fall seen last week on BOJ currency intervention. We expect the pairs to remain above 182 and 157 respectively. USDCNY has dipped too and could test 6.81 before bouncing back again towards 6.8550. Pound has dipped below 1.36 and could have scope to test 1.35/34 while Aussie can test 0.7250 before facing any rejection towards 0.71. USDINR needs to fall back below 94.75 to head towards 94.50/30. We expect immediate upside to be capped at 95-95.25.

The US Treasury and the German Yields have come down towards the end of last week. While there is room to fall further supports are there to limit the downside. While the supports hold, the broader view remains bullish for both the German and US Treasury Yields. They can rise back and go higher after testing their support. The 10Yr GoI has risen well above a key intermediate resistance. While this rise sustains, the yield can rise more in the coming days.

Dow remains vulnerable to a decline towards 48500-48000. DAX may stay range bound between 23500-25000 for some time. Nifty is also likely to trade within a broad 24500-23500 range, reflecting consolidation. Nikkei remains capped below 60000 and may decline towards 59000-58500 if it fails to break higher. Shanghai continues to stay relatively firm with upside towards 4125-4150.

Crude prices have turned volatile and corrected sharply. Brent likely to remain within a broad $100-$120 range and WTI within $95-$115 until clearer direction emerges. Precious metals remain under pressure, with Gold vulnerable towards $4550-$4500 and Silver towards $70 before a possible bounce back. Copper is likely to stay range bound within $6.00-$5.80. Natural Gas is strengthening but may continue to trade within the broader $2.80-$2.55 range for now.

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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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