Morning briefing: Euro declines on weaker Eurozone business activity

The Dollar index gained strength, and Euro came down after the weaker business activity reports in the euro zone economy. The index needs to see a rise past 101 to turn bullish towards 102 in the coming sessions, while Euro can trade within 1.1070-1.12. USDJPY and EURJPY are coming off contrary to our view of seeing a rise towards 145/146 and 162 respectively in the near term. BOJ Governor’s speech today would be important to watch for further directional clarity in both pairs. Aussie needs to see a rise past 0.6850, or else may fall back towards 0.67/66. RBA meeting is scheduled today wherein the Central Bank is likely to keep the interest rates unchanged. The pound could remain ranged between 1.31-1.33/34. USDCNY rose a bit after Governor Pan Gongsheng, at a news conference said the central bank will cut the reserve requirement ratios (RRR) by 50bps. It needs to sustain above the current levels and rise higher to negate a fall to 7.0250 or lower in the coming sessions. EURINR could trade within 94-92 region for a few sessions. USDINR is holding well above the interim support at 83.40 and while it holds, it can bounce back higher towards 83.60/80 in the coming sessions. Watch out for the US Case Schiller and US Consumer Confidence data release scheduled today.

The US Treasury yields have inched up. But resistances ahead can cap the upside and keep the broader downtrend intact. We expect the yields to fall back after testing the resistance. The German yields have come down indicating that the downtrend could have resumed. There is room to fall more from here. Any intermediate rise will be short-lived. The 10Yr GoI is inching up. The yield can consolidate in a narrow range before falling further. The broader trend is down.

Dow Jones sustains higher and could remain bullish to target further upside while above the support at 41750. DAX has recovered as the support at 18600 seems to be holding well and while above it, we could expect the recovery to extend further. Nifty and Shanghai continues to move up and can target 26000-26200 and 2800 before a corrective fall might be seen from there. Nikkei has broken above its resistance at 38000 and looks like to move up further from here.

Brent and WTI have fallen back a bit but chances of seeing a rise to their key resistance cannot be ruled out. Gold has scope to rise towards 2670-2700. Silver looks ranged between 30-32. Copper has bounced back well and has potential to rise towards 4.5 or higher. Natural Gas can test 2.9-3.0 before a fall back can be seen from there.

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