Morning briefing: Euro breaks below 1.1000, further decline possible

Vikram Murarka Kshitij Consultancy Services

The Dollar Index gained strength on Friday after the Stronger US NFP and lower Unemployment release. Still, a rise past 102.50/75 will be needed to head towards 104 or higher in the near term. Euro slipped below 1.10 and if the fall continues, it can get extended to 1.09 in the coming sessions. USDJPY and EURJPY if sustain rise, can test 150-151 and 164 respectively in the near term. Aussie has immediate support around current levels; need to see whether it holds and bounces back or extends the fall further. The fall continued in the Pound on Friday as well and it needs to see a rise past 1.32 to become bullish again, else it has a fair chance of testing 1.30-1.29 before rising back. EURINR may trade within 94-92.50/92 for now. USDINR below 84-84.10 can fall back towards 83.80/70 in the coming sessions.

The US Treasury yields rose, breaking above their intermediate resistance contrary to our expectation to see a fall from there. The rise was triggered by the strong NFP data and a fall in the unemployment rate. The NFP came in higher at 254K and the Unemployment rate fell to 4.1%. The yields can now see an extended rise from here and then resume the downtrend. The German yields have risen and are poised at their resistance. We expect the yields to reverse lower from here and resume the downtrend. The 10Yr GoI has surged. The upmove seems to be gaining momentum. The outlook is bullish, and more rise is on the cards.

Dow and DAX have risen well on Friday. Nifty indeed saw a fall towards 25000 as anticipated. Nifty if holds above 25000/24800, then it can produce a bounce towards 25500 and higher towards 26000 keeping our broader uptrend alive. Nikkei has risen above 39000 and looks bullish towards 40000. Shanghai will open tomorrow after a week-long holiday. It will face crucial resistance near 3400-3410.

Crude prices remain bullish for the near term. Brent can target 79-80 while above 75 and WTI can target 76-77 while above 74. Gold and Copper looks ranged between 2700-2640 and 4.5-4.8 in the near term. Silver has broken above its immediate resistance level of 32.50 and looks bullish towards 33-34 in the near term. Nat Gas remains bearish towards 2.7-2.6 while below resistance at 3.

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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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