Morning briefing: Taking Euro down towards 1.1400 or lower

Vikram Murarka Kshitij Consultancy Services

The brief decline in the Dollar Index seen last week has recovered, as the Dollar Index is headed towards 101, taking Euro down towards 1.14 or lower and USDJPY higher towards 162/163. EURINR can test 108 while below 109.50, while EURJPY may rise towards 185/186. USDCNY may trade within the 6.76-6.8250 region for the coming weeks. Aussie and Pound could remain below 0.70 and 1.34 for the very near term as they hold as interim resistance with the Dollar Index poised to rise. USDINR could fall to 95.08 but unless that breaks lower, it may bounce back towards 95.50 and gradually rally towards 96. We would suggest buying on dips for the near term.

The US Treasury Yields have room to go higher and test their resistance this week. But the price action thereafter will need a close watch. The German Yields continue to move up in line with our expectation. They can test their resistance and then turn down again. The 10Yr GoI looks vulnerable to break its immediate support and see a deep fall going forward.

Global equities remain broadly positive. Dow and DAX can rise further towards 53500-54000 and 26500 respectively while holding above key support levels. Nifty is also constructive above 24250 and can advance towards 24400 and higher. Nikkei has bounced back from recent lows but is likely to remain within the 68000-73000 range unless it breaks below 68000. Shanghai continues to hold above 4000 and could trade within the 4000-4150 range for some time.

Brent and WTI can decline further towards $70 and $65 before a corrective bounce back is seen. Gold is approaching immediate resistance near $4200-$4250, where the next directional move will become clearer. Silver and Copper continue to strengthen and can rise towards $65-$70 and $6.30-$6.40 respectively. Natural Gas is likely to remain range-bound within the broader $3.00-$3.50 range.

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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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