Morning briefing: Euro is headed towards 1.1700
The Dollar Index and Euro are headed towards 97-96 and 1.17 respectively. EURINR below 100.60 can dip to 99-98. Only if an immediate rise past 100.60 happens, can extend the rise towards 102. EURJPY and USDJPY can fall towards 166 and 144 respectively before attempting to bounce back in the near term. USDCNY is trading lower within the 7.20-7.17/16 range. The Aussie is trading higher within 0.6350-0.6550 and Pound has risen past 1.36 and if sustained, can extend it further to 1.3700-1.3750. USDINR has interim support near 85.90, above which the pair can again attempt to rise back towards 86.25-86.50. US New Home Sales data release is scheduled today.
The US Treasury yields have declined further and are at the lower end of their range. We retain our bearish bias to break the range on the downside and fall more going forward. The German yields have bounced back. But resistance ahead can cap the upside and keep the bearish bias intact. We expect the yields to fall back again. The 10Yr GoI is coming down within the range. For now, the range is intact. The bias is positive to see a bullish breakout of the range and a rise eventually.
Global indices are showing strength overall. The Dow has risen above 43,000 and could test 43,300–43,400 while holding above 42,700–42,800. DAX surged faster than expected and may target 24,500–24,800 if it sustains above 23,850. Nifty tested 25,300 but failed to hold; while above 24,900, it can retest 25,300 and potentially rise to 25,500. Nikkei is struggling to break $39,000, with a decisive move above it needed for a rise to $39,500–$40,000. Shanghai continues to trend higher and may move towards $3,450–$3,500 in the coming weeks.
Crude prices have fallen to their key supports. Brent holds above $66 with potential to rise towards $72–$74, while WTI has room to move up to $70–$72. Gold and Silver have also held their respective supports at $3,300 and $35.20, suggesting possible rebounds towards $3,400–$3,450 and $36.50–$37 in the near term. Copper continues to consolidate between $4.75–$5.00, awaiting a breakout. Natural Gas remains weak and may fall further towards $3.60–$3.50.
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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.
