Morning briefing: Is Euro's next stop 1.1700?
The Dollar Index can trade within its immediate range of 96-98/99 for some time before a break happens. A fall below 96 is not anticipated for now. The Euro is trading near 1.18 region. If the pair falls further, can test the support near 1.17. Overall, the targets of 1.19-1.20 are kept alive for now. EURINR needs to see a decisive rise past 101 to turn bullish in the near term. EURJPY is trading within the narrow region of 168-170. USDJPY needs to sustain above 144, else it can get dragged towards 142-140. USDCNY has deeper support at 7.15/14, while it holds, the pair can attempt to rise back towards 7.18 or higher. The Aussie and Pound continue to trade within 0.645-0.660 and 1.35-1.38 range. USDINR is trading within a narrow range of 85.75-85.45. Overall, while below 86, the targets of 85.25 and 85.00 are kept open for now. US NFP, Unemployment and the Avg hrly Earnings data releases are scheduled today.
The US Treasury yields have inched up further. But there is limited room on the upside. We expect the yields to reverse lower from their resistance and fall going forward. The US Unemployment data release today will be important to watch. The German yields have risen, breaking above their resistance. This is contrary to our expectation. While this break sustains, a further rise is possible. That will negate our earlier bearish view. The 10Yr GoI is coming down within its range as expected. The range is likely to remain intact for some more time.
The Dow Jones dipped on softer ADP employment data. The Dow can see a corrective dip to 44000 in the near term but overall uptrend remains intact. Dax has risen slightly and can target 24500-25000 while above 23500. Nifty tested 25378 yesterday but needs to sustain above 25400 today to rebound towards 25600 and higher. Nikkei and Shanghai trades lower today and could see some stability in the near term before an eventual rise.
Crude prices are rising amid geopolitical tensions, with Brent eyeing $70–$72 and WTI targeting $68–$70. Gold and Silver continue to strengthen, heading towards $3,450 and $37.50 respectively. Copper has broken higher and is aiming for $5.25-5.30. Natural gas is expected to rise towards $3.55-3.60 in the near term.
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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.
