Morning briefing: Euro can trade within 1.1800-1.1400 for some time

Vikram Murarka Kshitij Consultancy Services

Weaker NFP, new tariffs by Trump on various countries and firing of Labor Statistics Commissioner Erika McEntarfer led the Dollar Index to fall sharply to 98.60. Currently it is holding well above 98 and if sustained, can head back towards 100-101 as well. The Euro and EURINR can trade within 1.18-1.14 and 102-100/99 regions respectively for some time before a break is seen. EURJPY, if held above 171, can attempt to test 173-174. USDJPY and USDCNY both came down sharply as well along with DXY. Still while the support at 147 holds in USDJPY, it can target 149/50. While USDCNY is back within its 7.20-7.15 range. The Aussie and Pound have bounced well but any further rise from current levels can be limited to 0.65/66 and 1.34 max. Eventually both the pairs are likely to turn lower in the medium term. USDINR below 87.75 can test 87 in the near term.

The US Treasury yields have come down sharply on Friday after the jobs data. A weak job number for July and a sharp lower revision for the previous two months had triggered this fall in the yields. A further fall from here can drag them lower in the coming days. The rise that we have been expecting stands negated now. The German Yields remain stable. The bullish view is intact, and the yields can rise going forward. The 10Yr GoI remains stable. It can remain stuck in a narrow range within the broad one.

Equity indices fell sharply after the NFP data release on Friday and the fresh trade tariff updated by Trump that indicates a weaker labor data over the last few months and raised sentiments over a possible rate cut by FED next month. The Dow Jones and Dax have crucial supports near 43000 and 23000 which need to hold for a decent pull back else that can trigger further decline for the medium term. Asia-Pac also trades lower. Nifty can test crucial support near 24400 while Nikkei and Shanghai also have similar supports near 40000 and 3550 which need to hold to prevent further decline. Watch price action near crucial supports on all the indices.

Crude prices fell sharply on Friday amid concerns over global energy demand triggered by US tariff policies and weak economic data, with Brent and WTI likely to test supports at $68 and $66 respectively before a possible rebound. Gold surged towards $3416.90 and may target $3450, with a breakout above this level signaling further gains to $3600–$3700. Silver remains bearish towards $36.00–$35.50, Copper continues to face downside risks towards $4.20–$4.00, and Natural gas is expected to decline towards $2.70 despite trading above $3.00.

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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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