Morning briefing: On the softer Dollar, EUR/USD is moving towards 1.1250

Vikram Murarka Kshitij Consultancy Services

The Dollar Index trades lower as markets price in the widely expected Democratic gains in the US mid-term elections (DEM 45, REP 35 so far), which could keep downside pressure on the index. It may slip towards 101.00 while below 101.50, and a break below 101 would turn the medium-term view bearish. Friday’s US NFP needs a close watch- a higher-than-expected release could lift the index and raise December rate-hike expectations, while a weaker one would add to the pressure. The index is likely to stay volatile this week but hold above 101. On the softer dollar, EURUSD is moving towards 1.1250 (maximum upside 1.13) before a reversal, Dollar-Yen may ease towards 157, EURJPY towards 177–176 while the Pound could test 1.35 to the upside. The Aussie may dip towards 0.69 while USDCNY could rise towards 6.70. USDINR may test support near 94.50 (and head towards 94 on a break below), while EURINR is likely to trade within 106.80–105.70.

The US Treasury Yields have come down sharply from their highs. The near-term resistance is holding well. That keeps the downside open to test their support first before the broader uptrend resumes. The German Yields have bounced but may not sustain. They have room to dip further before a sustained reversal happens. The 10Yr GoI can dip more from here before reversing higher again.

Global equities remain mixed. The Dow Jones faces downside risks towards 51,000 amid US midterm election results favouring Democrats, with resistance near 52,000. The DAX is struggling below 26,000, keeping the downside outlook towards 25,500 intact. Nifty holds strong above 23,600, with scope towards 24,000. Nikkei has slipped below 62,000 and can fall towards 60,500-60,000. Shanghai looks weak around 3,600, with a decline towards 3,500 still possible.

Crude oil prices turned lower on Tuesday amid diplomatic hopes. Brent and WTI are testing key supports at 100 and 92 ahead of US midterm election results. In precious metals, Gold remains biased toward 3850–3800 while capped under 4000, while Silver stays vulnerable to further drops toward 45. Meanwhile, Copper broke below 6.4 support to target 6.3–6.2, and Natural Gas continues to range-trade between 2.7 and 3.2.

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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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