Morning briefing: The US treasury and the German yields have come down sharply

Vikram Murarka Kshitij Consultancy Services

Higher crude prices, rising inflation and concerns over the US-Israeli strikes on Iran are elevating global market risk, aiding alternative safe-haven currencies. The Dollar Index is expected to hold above 101.50 and recover toward 102+, while EURUSD may fall below 1.12. USDJPY tested 156.07 amongst global risk-off trades, but higher Japan CPI has led to a sharp rebound in USDJPY to current levels of 156.82 from 156.07 seen earlier in the morning. EURJPY can slowly rise towards 177 while above 175. EURINR is expected to rise towards 107-107.10 while above 105.70, while USDCNY remains bearish toward 6.65. The Aussie needs to break above 0.7050 to target 0.71; otherwise, it may retreat toward 0.6975–0.6950, while the Pound could rise toward 1.35. USDINR may test 95.50/60 in the coming sessions as it has rebounded well from crucial support near 94.30 yesterday.

The US Treasury and the German Yields have come down sharply. They have dipped below their support contrary to our expectation. Failure to rise back immediately can drag them further lower. That in turn will delay the rise back move which we had expected to happen from their support. The 10Yr GoI is moving up in line with our expectation. It has room to rise more from here.

Dow can extend the rise towards 53500-54000 while it holds above 52500. DAX needs to hold 25300 to move towards 25800. Nifty is holding within 22500-23000, with a rise towards 23000 possible before it resumes the move lower towards 22500. Nikkei remains weak below 64000, with further decline towards 62500-62000. Shanghai remains weak below 3700 and can fall towards 3600-3500.

Brent and WTI have risen amid escalating tensions in Saudi Arabia following Houthi attacks, raising concerns over oil supply disruptions. Brent could rise towards $116-$117, while WTI may reach $102-$105 before a potential pullback. Gold is testing support near $4,000, with a break below this level potentially triggering a decline towards $3,900-$3,800. Silver remains under pressure and could fall towards $52-$50. Copper could decline towards $6.20-$6.00 if it breaks below $6.35. Natural gas could rebound towards $2.85-$3.00 as long as support at $2.70 holds.

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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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