Morning briefing: Euro can soon test 1.1000 on the downside

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is trading near the immediate resistance around current levels, a break past which will be needed to head towards 102.50-103 in the near term. Euro can soon test 1.10 on the downside. USDJPY has risen past 145 and needs to sustain above current levels to rise further towards 148-150, while EURJPY can remain ranged within 160-164. The pound is coming off as expected and is likely to fall towards 1.31 or lower. Aussie is currently moving within a narrow range of 0.6850-0.6750. USDCNY has risen well above 7.08 and can test 7.12/14 soon. EURINR can test 92 in the coming sessions while below 93. USDINR may continue to trade within 83.75 -84.00 region for the near term.

The US Treasury and the German yields have moved up further on Friday. The US PCE data released aided in pushing the Treasury yields higher. The US PCE inched up to 2.5% (YoY) in August, up from 2.47% in July. Resistances are there to cap the upside in both the US and German yields. The broader trend is down, and the US and German yields are likely to resume the downtrend and fall again. The 10Yr GoI sustains higher. But strong resistances are ahead which can restrict the upside and keep the broader downtrend intact.

Dow Jones and Nifty are heading up towards their resistance zone, which if holds, can lead to a corrective fall. DAX and Nikkei looks bullish towards 19500 and 39000-39500 respectively. Shanghai has fallen back as expected and remains vulnerable to see a fall towards 2800-2775.

Commodities have fallen sharply. Crude prices have fallen but have crucial supports coming up which may hold and keep them ranged for a while. Gold and Copper downside might be limited to 2500 and 4.1. Silver on the other hand has fallen below 29 and may come down further to 28.50-28.00. Natural Gas can rise towards its upper end of the 2.0-2.3 range.

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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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