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Morning briefing: Euro may come off towards 1.1350

Risks of an escalating US-Iran conflict pose some threat for the Dollar Index to hold on to 101 and start rising higher in the near term in which case the other major currencies may weaken against the Dollar. Euro may come off towards 1.1350, USDJPY could break above 162.85 to head towards 163/165 target zone, EURJPY could rise on a break above 186.32 and the Aussie and Pound could dip to 0.69 and 1.34/33, respectively. EURINR has some scope to test 109.50 before rising towards 110 while USDCNY needs to hold above 6.77 for 6.78-6.7850. USDINR can rise to 96.50-96.75 with limited scope of dip to 96.

The US Treasury Yields remain lower. There is limited room on the downside. We expect the support to hold and the yields to rise back eventually going forward. The German Yields sustain higher and keep intact the bullish view. They can rise more. The 10Yr GoI has risen back. That keeps alive the chances of seeing more rise to test its resistance before resuming the broader downtrend.

Dow is likely to remain within the 52000-53000 range while above 52000, although a break below this level cannot be ruled out. DAX continues to trade within the 24700-25500 range while support at 24700-24800 holds. Nifty may witness a gap-down opening but can recover towards 24400-24600 while above 24000. Nikkei remains bearish towards 62000-61000. Shanghai continues to weaken below 3800 and can decline further towards 3700-3600.

Brent and WTI have reached our earlier targets and can extend their gains towards $95 and $90 respectively. Gold continues to test the crucial $4000 support, and a sustained break below this level could trigger a decline towards $3800-$3600. Silver is likely to remain range-bound between $55 and $65 while support at $55 holds. Copper has bounced from key support and can rise further towards $6.50. Natural Gas remains weak and can decline towards $2.85-$2.80 in the near term.


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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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