Morning briefing: Euro may test 1.1400-1.1300

Tensions in the Middle East continue to trigger safe-haven dollar demand, taking the Dollar Index to 100.54. With immediate support at 99, there is scope for a rise to 101-101.50 soon. The Euro may test 1.14/1.13 with upside limited to 1.16. EURINR may hold above 105.50 and rise towards 107. A range of 105-107 may hold for now. EURJPY has support at 182 which can trigger a rise towards 183/184 while USDJPY could rise to crucial resistance near 160 before seeing a dip from there towards 158. USDCNY can slowly rise to 6.92/95 while above 6.85. Aussie and Pound are headed towards 0.71/72 and 1.33/35, respectively. The USDINR closed at the upper end of the mentioned range of 92.00-92.50 and a break above 92.50 can take it higher towards 92.75/93.00 soon. Higher India CPI release last week and rising Dollar Index can keep USDINR higher in the near term.

The US Treasury yields remain higher. The view remains bullish to see further rise from here. The German Yields are moving up in line with our expectation and are coming close to our expected levels. Charts indicate that an extended rise is possible. The 10Yr GoI remains stable and unclear for the near term. It can go either way from here. However, the big picture remains positive to see a rise eventually while it sustains above its support.

Global equities continue to remain under pressure. The Shanghai Composite looks relatively better poised among the lot. It manages to retain and oscillate within its sideways range. The Dow is coming down towards 46000. The fall can extend to 45000. DAX remains weak to see 22,800 on the downside. Nikkei can test 52000 initially and can even fall to 50000-48000 in the medium term. Nifty was knocked down badly and is approaching 23000 much faster than expected. There is room to see 22200-22000 after which a bounce is possible.

President Trump has threatened to hit Iran’s oil export infrastructure on the Kharg island, which could trigger severe retaliation as about 90% of Iran’s exports are said to be shipped from the Kharg island. Crude prices may continue to rise in the near term, with immediate targets of $108-110 on Brent and $104-106 on WTI. Gold and Silver are in their corrective dips targeting $4800 and $75/70, respectively. Copper can test support at $5.6 which if holds can produce a decent bounce, else can get dragged towards $5 in the medium term. Natural gas is slowly inching higher. While a sustained rise above $2.8 holds, a test of $3.5 looks likely in the near term.