Morning briefing: Euro can trade within the 1.1550-1.1700 region

Vikram Murarka Kshitij Consultancy Services

The Dollar Index & Euro can trade within 99.50-98.50 & 1.1550-1.1700 region respectively for now. EURINR needs to rise past 103 to head towards 104, else it can trade within 102-103 region. EURJPY & USDJPY have inched lower and a break below 176 & 151 if seen can make the pairs vulnerable to extend the fall towards 170 and 150–148 respectively in the medium term. USDCNY is coming off and price action around 7.10 needs close monitoring to determine whether the pair will consolidate within the 7.10–7.15 range or extend its fall toward 7.075. The Aussie can extend the gains towards 0.665-0.670 as long as it stays above 0.655. The Pound needs to see an immediate rise past 1.3275, else any break below 1.325 can open the doors for 1.315 as well. USDINR can trade within 88.50-88.00 region for sometime. Watch out for the FOMC scheduled today.

The US Treasury yields remain stable ahead of the US Federal Reserve meeting tonight. There is room to fall from here in the near-term before a reversal happens. A 25-bps rate cut is broadly priced in the market already. We will have to wait and watch. The German yields sustain higher but stable. A strong rise is needed from here immediately to avoid a fall. The 10Yr GoI continues to hover near the upper end of the range. It seems like the yield is lacking strength. So, a dip within the range looks more likely.

The Dow has risen well ahead of the FED policy meeting where markets expect another rate cut by 25bps. Dax has dipped yesterday but could rise back to face rejection from resistance at 25000-25200. Asia-Pac is mixed. Nifty declined yesterday as profit taking seems to be in place. However, eventual rise above 26000 can take it towards 27000. Nikkei is headed towards 52000 while Shanghai is trading just at the crucial resistance at 4000, a sustained break past which is needed to rally towards 4200 eventually.

Crude prices extended their fall weighed down by persistent concerns over a global oil surplus and continue to decline in the near term. Gold broke below $4000 and tumbled to $3901.30, keeping the short-term view bearish towards $3850-3800. Silver also weakened, staying vulnerable below $48 with potential declines towards $45-44. Copper remained range-bound between $5.20-5.10, awaiting a breakout for direction, while Natural Gas continued to slide, heading towards $3.70-3.60 in the near term.

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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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