Morning briefing: Euro moves within the 1.1800-1.1600 range

Vikram Murarka Kshitij Consultancy Services

The Dollar Index can head towards 99-100 in the near term on a confirmed break above 98. The Euro and EURINR are moving within their respective ranges of 1.18-1.16 and 103.50-102.50. EURJPY needs to bounce from support at 172 to keep the 172-174 range intact, while USDJPY can trade within the 146-149 region. USDCNY is headed towards deeper support at 7.11. The Aussie dollar has scope to rise towards 0.67 while it remains above 0.660-0.655. The Pound can trade within the 1.36-1.34 region for some time. USDINR, above 88, can rise towards 88.35-88.50 in the coming sessions. ECB meeting and the US CPI data is scheduled for release today.

The US Treasury yields have come down again. Failure to get a strong rise from here will keep alive the danger of seeing more fall going forward. The US CPI data release today will need a close watch. A high inflation number will aid the Treasury yields to go higher. The German Yields remain lower and stable. They have room on the downside to test their support. After that the broader uptrend can resume. The ECB meeting outcome today is important to watch. The 10Yr GoI has come down again. It can oscillate in a sideways range for some time.

Concerns over a softening US labor market and higher possibilities of FED rate cuts have turned the equity market mixed with all eyes on the crucial US inflation data and ECB policy meeting due today. Dow Jones can test 46000 while Dax can dip to 23500 before rebounding from there. Nifty could attempt to rise and sustain above 25000 while Nikkei can continue to rise towards 44500. Shanghai, if breaks below 3800 can move back to the broader range of 3700-4000 and hold on to it for a few weeks.

Brent and WTI have risen but both face resistance, with Brent likely to reverse from $68.00/$68.50 towards $65–$64 and WTI vulnerable to fall towards $60–$58 while below $64. Gold remains bullish for a rise to $3,750–$3,800, Silver is expected to consolidate within $42–$41 until a breakout gives direction. Copper has bounced back with potential to climb towards $4.70–$4.80, and Natural Gas is weakening against expectations and could slide further towards $3.00–$2.80 while below $3.20.

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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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