Morning briefing: If Euro falls further can test 1.0770

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is gradually rising and if sustained can test 105-105.50 in the near term while the Euro, if falls further can test 1.0770 before attempting to rise back. USDJPY and EURJPY are nearing our mentioned targets of 152 and 164 respectively. Aussie and Pound are likely to remain ranged within 0.66-0.68 and 1.2950-1.3150 region respectively. USDCNY, above 7.1240 can target 7.1436 or even 7.1751 in the near term. USDINR is likely to remain ranged within 83.98-84.12 region. EURINR continues to trade below 91 and failure to rise past it can make it vulnerable to test 90.50-90 in the near term. Watch out for US Existing Home Sales data release scheduled today.

The US Treasury and the German yields continue to move up. The Treasury yields are seeing an extended rise now. They have room to move up further now before resuming the broad downtrend. The German yields are keeping intact our bullish view and can rise further from here. The 10Yr GoI is turning down from the upper end of its broad range. The sideways range is intact now. Bias is bullish to see an upside breakout of this range eventually.

The Dow Jones tested the initial support level at 42700 as anticipated, reaching a low of 42718 before recovering to levels above 42900. While the index holds above strong support at 42500, a rise towards 43400, with the potential to reach 44000, remains likely. Meanwhile, DAX marked an intra-high of 19591 before sharply coming down and testing the support of 19400. A bullish outlook prevails with targets of 19,800-20,000 while above the 19200. On the other hand, Nifty broke below the support of 24700 and sharply fell to 24400. View could turn bullish again while above support at 24200. Nikkei held firm below 38500, and the view remains bearish to test support of 38000 and 37500. Shanghai has risen above 3300, but we need to see whether it holds above 3300 or crawls back into the range of 3300-3200.

Crude prices surge as China increases Oil import quota by 6%. While below immediate resistance levels on crude prices, we expect a corrective dip to $74-72 in Brent and $70-68 in WTI for the near term. Gold and Silver have tested their immediate resistance levels and while these levels hold, a fall to $2720-2700 and 34.5-34.0 respectively can be seen in the near term. Copper looks ranged between 4.5-4.30/25 for some time. Natural gas can target 2.4-2.5 while above 2.3.

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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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