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Morning briefing: Euro is coming off and could fall to 1.1500

Rising fiscal risks in the UK and political instability in Japan strengthened the Dollar yesterday. The Dollar Index can head towards 99.00-99.50 before halting. The Euro is coming off and a fall below 1.16 can drag it to 1.15 as well before bouncing back. EURINR can extend the ongoing fall to the support at 102.00. EURJPY and USDJPY need to see a break past 174 and 149 to bring higher levels of 176 and 150-152 into the picture respectively. USDCNY can target 7.15-7.17 in the near term. Aussie can continue to hold its 0.655-0.640 range, while Pound can test 1.33 if the ongoing fall extends further. USDINR is trading above 88 on the NDF and while it trades above 87.75,can ascend towards 89 as well. while below 88.50, a test to 88.00-87.75 looks likely in the near term. IN Services PMI and EU Composite PMI data releases are scheduled today.

The US Treasury yields continue to move up. They are heading up to test their resistance. The price action at the resistance will need a watch to see if the upmove is extending or reversing lower again. The German yields have risen further. The bullish view is intact, and there is room to rise more. The 10Yr GoI has come down within the range. For now, the range is intact and the yield can continue to oscillate within it.

Most indices are trading in the negative territory. The Dow Jones could test 45000 before bouncing from there while the Dax has broken below the crucial support at 23500. Failure to bounce back immediately can drag it lower towards 23000-22000. Watch price action over the next few sessions. Nifty could not sustain its rise above 24700 yesterday and back to close sharply lower. A fall to 24400 is possible within the near term range of 24400-24800. Nikkei could limit its fall to support at 41500 and rise back towards 43000 while Shanghai trades in the green today and can rise slowly towards 4000 while above immediate support at 3800.

Crude prices have broken above resistance, supported by supply concerns from Ukraine’s strikes on Russian refineries and prospects of fresh US sanctions, with Brent aiming for $70–$72 and WTI for $66–$68. Gold has surged to $3,600 and faces a key resistance near $3,600–$3,650, a break of which could open the way to $3,800–$4,000 in long run, while failure may lead to a pullback towards $3,500–$3,400. Silver needs a break above $42 to extend gains towards $42.50–$43, otherwise it risks sliding back to $41–$40. Copper remains firm with scope to rise towards $4.70–$4.75, and Natural Gas continues to inch higher with potential to reach $3.10–$3.20.


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Author

Vikram Murarka

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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