Morning briefing: Euro can head towards 1.1700-1.1800

Vikram Murarka Kshitij Consultancy Services

Donald Trump has announced an additional 25% tariff on India, bringing the total tariff rate to 50%. The Dollar Index is trading lower within the 100-98 range. Any break below 98 can drag it to 97-96. The Euro has risen past 1.16 and if sustained, can head towards 1.17/18 as well. EURINR and EURJPY face immediate resistance just above current levels. Need to see whether it holds or the rise gets extended towards 103-104 and 173-174 respectively. USDJPY needs to break past 148 to target 149-150, else a dip to 146/45 can happen initially. USDCNY is holding its 7.20-7.14 range for now. The Aussie has risen past 0;65 and if sustained, can head towards 0.66, while the Pound can rise towards the resistance at 1.34. USDINR might face upward pressure due to the tariffs imposed on India. A rise past 88 can take it to 88.30 as well. The targets of 87.50-87.25 are kept open for now.

The US Treasury yields are moving up. The upside is limited as the resistance ahead can cap the upside. The yields are likely to reverse lower and fall again. The German yields have risen back. That keeps intact our bullish view. The yields can rise more. The 10Yr GoI surged after the RBI kept the repo rates unchanged at 5.5%. The long-awaited bullish breakout of the range has happened. This now opens the door for further rise.

The Dow Jones and Dax have risen and look bullish towards 44500-45000 and 24000-24500 respectively. Nifty continues to trade lower on trade tariff concerns. The index may fall further to 24400 after additional 50% tariff announcement by Trump yesterday. Nikkei and Shanghai are trading higher as expected and could soon test 42000 and 3700 respectively.

Crude prices have broken below key support levels, indicating further downside towards $64 (Brent) and $62 (WTI) respectively. Gold is moving flat near resistance and needs a breakout to turn bullish, while Silver continues its upward move toward $39–$40. Copper is holding above $4.4, likely to trade between $4.3-$4.5 until a breakout. Natural gas is rising on hotter US weather, with potential to reach $3.15–$3.20 if it stays above $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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