Morning briefing: Euro edges lower, trading above 1.0400

Vikram Murarka Kshitij Consultancy Services

The Dollar Index remains volatile ahead of the FOMC, ECB and the Tariffs speculations. At the moment index appears uncertain on whether it will head towards 109 and higher or it will test deeper support around 106.00-105.50. The Euro have fallen a bit but above 1.04, it can attempt to rise back. Only a break below 1.04 can be bearish for pair. EURINR needs to rise past 91 to maintain the bullishness, else any break below 90 can drag it further to 89. USDJPY is back within 155-157 range. AUDUSD and Pound can trade within 0.63-0.62 and 1.226-1.24 region for a while. USDCNY looks stable above 7.25 and can test 7.28/29 if the current rise sustains. USDINR is trading within 86.20-86.60 region but it can slowly descend towards 86.00-85.90 in the coming weeks. The US Durable Goods Orders, US Case Schiller and US Consumer Confidence data releases are scheduled today.

The US Treasury and the German yields continue to fall in line with our expectation. Both the yields have room to fall more from here before reversing higher again. The US Fed meetingon Wednesday and the ECB meeting on Thursday are key events to watch this week. The 10Yr tested its support and has bounced as expected. While the support holds, the yield can rise in the coming days.

The Dow Jones dipped to 44000 initially but quickly recovered, signaling bullish momentum and keeping the view for a rise to 45100 intact. DAX saw a slight decline; however, while above 21000, the bias remains positive for a potential rise towards 21500-21900. Nifty has broken below 23000, falling to 22800. It could extend its decline toward the key support level of 22500 before attempting a reversal. Nikkei has fallen below 39500 and is now heading towards 39000-38000. Shanghai struggled to rise past 3270 and appears to lack strength. The index is likely to hold within the 3200-3300 range in the near term.

Crude prices have plunged due to the concerns of weaker Chinese stimulus. While the respective support levels hold, a bounce back towards 79-81 (Brent) and 75-77 (WTI) can take place in near term. Gold remains biased for a rise towards 2800-2850 while Silver can range between 30-31. Copper and Natural Gas look bearish towards 4.1 and 3.0-2.8 .

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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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