Morning briefing: Euro can rise towards 1.0900 before pausing
The Dollar Index trades lower while the Euro can rise towards 1.09 before pausing. USDJPY and EURJPY could dip slightly to 148.80 and 161.80 in the very near term. Aussie could have a limited upside to 0.68 for now while Pound needs to break above 1.31 to rise further. USDCNY can trade within 7.1240-7.10 with a possible dip to 7.08. USDINR is likely to remain ranged within 84.12-83.98 region. EURINR needs to break above 91.50 to take it higher towards 92 else can come off towards 91 or lower.
The US Treasury yields sustain higher. They still keep alive the chances of seeing an extended rise before reversing lower to resume the downtrend. Only a fall below the immediate support will negate this rise. The German yields will need a strong follow-through rise from here to strengthen the bullish case to move higher. Else they can fall back again. It is a wait and watch situation. The Indian 10Yr GoI is moving up within the broad range. The bias is bullish to break the range on the upside and move higher eventually.
The Dow Jones remains stable above 43200, maintaining a bullish outlook with potential to reach 44000. The DAX has advanced beyond 19650 and is expected to continue its rally towards of 19800-20000. Nifty has recovered well from a low of 24567, climbing above 24800 on Friday. A decisive break above 25000 is necessary to mitigate downside risks. Nikkei continues to oscillate around 39000 and currently trades above it. While it holds above 39000, an attempt to rise towards 39500-40000 can be seen. Shanghai, on Friday attempted to rise past 3300 to a high of 3310 but failed to sustain there and retraced back to the sideways range of 3200-3300.
China's weak crude demand has weighed on Crude oil prices. Also, crude is under pressure on speculation that Israel's killing of Hamas leader Sinwar could lead to a cease-fire in Gaza that eases Middle East tensions. Immediate support levels need to break on the crude prices to make them bearish or else a bounce back to $75-76 on Brent and $70-72 on WTI can be expected in the near term. Gold and Silver have moved up sharply. Near term looks bullish towards $2750-2770 and $34.5-35.0 respectively. Copper can range between 4.50-4.30/25 for some time. Natural Gas looks bearish towards 2.2-2.0.
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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.
