Morning briefing: Euro tested 1.1700
The Dollar Index has declined further within its 99-96 range but we maintain our bullish bias towards 101. The Euro and EURINR tested 1.17 and 101 respectively. Even if the rise extends further, it can be limited to 1.18 and 102 respectively. EURJPY above 172 has a scope to rise towards 175 in the near term. USDJPY is trading within 149-147 region but the target of 150 and higher is kept alive. USDCNY is nearing the support around 7.16-7.15 which can be tested soon. The Aussie and Pound have risen slightly but face immediate resistance at 0.66 and 1.35/36 respectively. USDINR has risen well so far and is likely to test 86.50 in the near term.
The US Treasury yields have come down further and are close to their support. We expect the support to hold and the yields to reverse higher. A slight extended fall is also a possibility before the expected reversal happens. We have to wait and see. The German yields have come down sharply ahead of the ECB meeting on Thursday. There is support near current levels which we expect to hold and keep the broader uptrend intact. The 10Yr GoI continues to remain stable near the lower end of its narrow range.
The Dow Jones can remain ranged between 44000-45000, while the DAX rose yesterday and needs to break and sustain above 24500 to move higher towards 25000. Else, the Dax can decline to 24000. Nifty moved up yesterday and is moving close to the resistance region of 25200-25250. A break above this resistance region is needed for a rally towards 25400+; else can face a corrective decline towards 24800/600 again. Nikkei is likely to trade within the 39000-41000 range for a couple of weeks. Shanghai looks strong and could soon test 3600-36500 on the upside.
Brent and WTI have broken key supports at $69 and $66 respectively, dragging prices lower on expectations of increased supply, with more downside likely. Gold and Silver are moving higher in line with our bullish view, targeting $3,500 and $41 respectively. Copper is inching up towards $5.80, while Natural gas has dipped on cooler weather forecasts but may find support near $3.10 before bouncing back.
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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.
