Morning briefing: Euro trades between 1.0850-1.0750/30 region

Vikram Murarka Kshitij Consultancy Services

The Dollar Index and Euro are trading between 103.75-104.75 and 1.0850-1.0750/30 region respectively. Still, the Index looks bearish to 103-102, while it trades below 105. EURINR needs to sustain above 92.50 and rise past 93, else can fall back towards 92.0-91.5. USDJPY above 149 can attempt to rise back towards 151. EURJPY is trading lower within its broad range of 164-160. The USDCNY needs to see a strong break past 7.27 to rise towards 7.30, else can fall back within its range of 7.26-7.27. AUDUSD & Pound are holding the respective ranges of 0.62-0.64 and 1.285-1.300 in the near term. USDINR was closed yesterday. The outlook appears a bit bearish to 85.25-85.00 while it trades below 85.75. US ADP Employment and the IN-Manufacturing PMI data releases are scheduled today.

The US Treasury yields continue to fall. The bearish view is intact and there is room to fall more. The German yields have come down. But supports are there to limit the downside and keep the broader uptrend intact. We expect the German yields to reverse higher after testing their support. The 10Yr GoI can dip further to test its support and then possibly rise back again.

The Dow Jones closed near 42000; it needs a rise past 42200 to turn the outlook to bullish. Else the index looks bearish towards 40000-39000. DAX has risen well, and a follow-through rise would negate the downside risk to 21500-21300. Nifty has fallen below 23200, and it's heading towards 23000-22850, possibly forming an inverted head and shoulder pattern. Nikkei tested the interim support near 35400 before a slight recovery. A break below could lead to a further fall to 34000-33000. Shanghai is attempting a rise past 3380. While below it, the index can come down to 3300-3250.

Brent and WTI maintain a bullish outlook, targeting $76-$78 and $74-$76, respectively. Gold may rise towards $3,200-$3,250 before a potential reversal to $3,000-$2,900. Silver is holding above support, with a rebound towards $35.00-$35.50 likely. Copper remains above $5.00, with expectations of a rise to $5.15-$5.25. Natural gas has fallen below $4.00, with further downside potential towards $3.80-$3.60.

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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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