Morning briefing: Euro has support at 1.1850

Vikram Murarka Kshitij Consultancy Services

The DXY has dipped below 97 but needs to rebound back immediately to rise towards 97.50/98. Euro has support at 1.1850 which is likely to hold and push the spot towards 1.1950-1.20. EURINR on the other hand could dip to 106.35 while below 108. EURJPY could gradually rise to 184/186 while above 181/180. USDJPY could rise towards 154/156 while above 153-152.25. USDCNY can rise to 6.92 while above 6.90, crucial support remains at 6.85. The Aussie can test 0.70/69 while below 0.7150 while the Pound needs to break past 1.37 to head toward 1.38+ levels, else can initially test 1.35. USDINR can trade within the 90.30-90.80/85 region for now.

The US Treasury yields have declined further sharply, breaking below their key support. That opens the door for the yields to fall more from here. The US CPI data release on Friday triggered this sharp fall. The US Headline CPI came in at 2.39% (for January), down from 2.65% (December). The German yields have also come down further. The bias is negative to see more fall. The 10Yr GoI has risen back from its low of Friday. There is not much room to fall from here. We can expect the yield to rise back in the coming days.

Dow has declined as expected and is holding above key support near 49000, which can create a bounce towards 49800–50000. DAX remains capped below 25000 and looks vulnerable to a fall towards 24800–24500. Nifty has broken below 25500, and remains vulnerable for a decline towards 25200–25000. Nikkei continues to weaken in line with expectations and may head towards 56500–56200. Shanghai has dropped sharply and could test support near 4050 before attempting a rebound.

Crude prices are likely to remain range-bound. Brent holding above $66 within $70–$66 and WTI above $62 within $66–$62. Gold has bounced but remains vulnerable below $5100 for a fall towards $4900–$4800. Silver can decline towards $70–$65. Copper continues to look weak towards $5.70–$5.65. Natural Gas has opened lower after closing higher, but as long as $3 holds, a bounce towards $3.2–$3.4 remains possible.

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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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