Morning briefing: Euro could fall to 1.0850 on resistance hold

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has risen well and can test 103.80-104 in the coming sessions before topping out. On the other hand, Euro is near the immediate resistance around 1.0950/60 which if holds, can push the pair down towards 1.09-1.0850. USDJPY and EURJPY may soon test our mentioned targets of 148-150 and 161/163 respectively while within an overall downtrend. Pound is nearing towards the immediate resistance around 1.2750/28 which if holds, can drag the pair down towards 1.26, while the Aussie needs to break above 0.66 to turn bullish. USDCNY is headed towards 7.20. EURINR could test the supports near 91.50 and 91 before possibly bouncing back towards 92. USDINR has crucial resistance at 84; need to see whether the resistance holds or not. Watch price action closely around the current levels. Any pullback can drag it down to 83.80.

The US Treasury yields have come closer to a key resistance. We expect the yields to turn down and resume the fall. A sustained break above the resistance will only negate the bearish view. The German yields remained stable and higher. The overall view is bearish and any rise from here will be short-lived. The 10Yr and 5Yr GoI have bounced but may not sustain higher. Though there is some room to rise from here, the yields are likely to reverse lower again and resume the fall. The RBI kept the repo rates unchanged at 6.5% in its policy meeting yesterday.

Decent rise/recovery is seen in most of the equities after US Unemployment Claims came out lower than expected, indicating a resilient labour market thereby easing fears about the economy concerns. Nifty is stuck in a narrow range. Shanghai can target its immediate resistance in the near term before resuming its downtrend.

Brent and WTI continue their uptrend and can potentially target $78-80 and $80-82. Gold, Silver and Copper have recovered a bit after US Unemployment Claims fell to 233K than the market expectation of 241K which was a hawkish case for Fed rate policy. Natural Gas can continue to rise further towards 2.2-2.4.

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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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