Morning briefing: Euro has upside capped at 1.0450

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is rising as expected and overall our view remains bullish towards 110-111 in the near term. Euro has upside capped at 1.0450 and a confirmed break below 1.03 can drag the pair to 1.02 or even 1.00 in the medium term. EURINR and AUDUSD need to see a decisive break on either side of their respective ranges of 90-88 and 0.63-0.62 for further directional clarity. USDJPY, on a sustained rise past 158.50 can head towards 160 or higher in the coming sessions. Pound is coming off as expected and can soon test 1.22 on the downside. EURJPY is stuck between 165 and 163. USDCNY can gradually head towards 7.35. USDINR has risen past 85.80 and while the rise sustains, a test to 86 can happen in the near term.

The US Treasury yields remain higher. View is bullish. The yields can rise more from here. The US non-farm payroll (NFP) and the unemployment data release tomorrow will be important to watch. The German Yields are moving up in line with our expectation. Bullish view is intact. The 10Yr GoI has risen back. But resistance is ahead which has to be broken to negate the fall that we have been expecting. For now, the near-term outlook is negative.

The Dow Jones has seen a slight rise but remains bearish as long as it stays below 43000, with a potential decline toward 42000-41800. DAX rose to 20480 during the session but gave up its intraday gains and closed flat. The index remains bullish toward 20700 as long as it sustains above 20200. Nifty is holding above the key support of 23500, maintaining the sideways range of 23500-24100. Nikkei continues to slip and remains below 40000. The index is expected to stay within the range of 38000-40000 unless it rises decisively past 40000 to target 41000-42000. Shanghai is holding below 3250 and could fall further toward 3150 if it breaks below 3200. A strong move above 3250 is needed to reverse the bearish outlook.

Crude prices have reversed from their respective resistance levels and appear bearish, with a decline expected towards 75-74 (Brent) and 72-71 (WTI). The outlook for Gold and Silver is mixed, but the bias leans towards a rise to 2700-2750 and 31.5-32.0, respectively. Copper and Natural Gas appear bullish, targeting 4.3-4.4 and 3.8-4.0, 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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