Morning briefing: Euro stumbles below 1.1000, faces test at 1.0900 support
|The Dollar Index needs to rise past 102.75 to make the outlook further bullish. Else it can get dragged towards 102 or even lower. The Euro failed in its attempt to rise past 1.10 and while below it, a test to the support of 1.09 could be seen. The outlook on USDJPY and EURJPY appears a bit uncertain but we are not ruling out the possibility of a fall to 146 and 161 until further directional clarity. Aussie is rising back but the upside looks capped at 0.68. Overall, the view appears bearish below 0.68. Pound needs a rise past 1.31 to make the outlook bullish Downside could be limited to 1.30-1.2950. EURINR is trading lower within the range of 94-92.50/92, need to see whether it holds or falls further. USDINR below 84-84.10 can fall back towards 83.90/80 in the coming sessions. Watch out for the RBI Policy meeting scheduled today.
The US Treasury and the German yields remained stable. The Treasury yields can rise further from here and then turn down again to keep the broader downtrend intact. The US CPI data release tomorrow will need a watch. A low CPI number can drag the yields lower. The German yields on the other hand can negate the danger of falling back if they get a strong follow-through rise from here. We will have to wait and watch. The 10Yr GoI has come down sharply. But supports are there to limit the downside and keep the uptrend intact. The RBI meeting outcome today will need a close watch. The expectation is to keep the policy rates unchanged.
The Dow Jones held its support level at 41,800 and has risen past 42,000 keeping the upside view alive for now. The DAX remains stable above 19,000 but lacks the strength to build upward momentum. Nifty maintained support at 24,700 and climbed past 25,000. Meanwhile, the Nikkei gapped up to 39,400 but has since retreated keeping the near-term view ranged between 38000-40000. As anticipated, the Shanghai Index pulled back to a low of 3,323.96 before staging a recovery. Need to see if it can manage to sustain trade above 3300 or fall lower.
Crude and gasoline prices fell as China refrained from adding new stimulus measures. If the immediate support levels hold, Brent and WTI can bounce back towards 80-81 and 76-77 respectively in the near term. Metal prices have fallen sharply to their respective support levels and while these levels hold, a bounce back is expected in the near term. Nat can extend the fall towards 2.6 in the near term.
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