Morning briefing: Euro is declining and can test 1.0650 on the downside
|Good Morning!
After the higher-than-expected US Existing Home Sales data release, Dollar Index rose sharply to test 105.915 on the upside. EURUSD on the other hand is declining as expected and can test 1.0650 on the downside. Dollar-Yen and EURJPY are nearing our expected targets of 160 and 171 respectively. Watch price action closely around current levels. Aussie & Pound continue to trade within 0.6580-0.6720 and 1.26-1.28 region respectively. USDCNY has risen past 7.26 and might rise further towards 7.28 in the coming weeks while above 7.25/7.24. EURINR can trade within 89.00-89.80 region for some time. USDINR falls back below 83.60 last Friday and if the fall sustains, a dip towards 83.45/40 could be seen.
The US Treasury yields are struggling to get a strong rise. That keeps them vulnerable to fall more to test their key supports. The German yields continue to hover around their crucial support. A strong follow-through rise is needed from here to avoid a deeper fall. The 10Yr and 5Yr GoI are holding above their support. A rise from here can take them higher in the coming days.
Dow Jones can rise to 40000 on a strong break above 39200. DAX struggles to rise which makes it vulnerable to break it support of 18000 and fall further to 17700. Nifty has dipped again after testing an all time high but has support below current level, which if hold, can lead to a bounce back. Nikkei lacks a strong follow through rise but bias will remain bullish as long as it holds above the support at 38000. Shanghai has broken below its support and can fall further in the near term.
Crude prices have dipped slightly but our view will remain bullish as long as the crude prices sustains above their near term support. Gold and Silver have fallen back sharply as the resistance held well and might dip further towards their immediate support from here. Copper has fallen sharply towards the lower end of the range and looks vulnerable to break on the downside and fall deeper in the near term. Natural gas has recovered a bit but could face resistance at 2.90/2.95.
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