Morning briefing: Euro has risen from levels seen yesterday

Vikram Murarka Kshitij Consultancy Services

Dollar Index has eased along with a dip in the bond yields but could have scope for further rise in the medium term. This has led to modest gains in other currencies against the US Dollar. Euro has risen from levels seen yesterday but could be short lived as a decline towards 1.11 is still on the cards. USDJPY can see a slow rise towards 159 or higher and EURJPY can test 178. EURINR looks bearish towards 105 while USDCNY could trade sideways for sometime while above 6.69. USDINR can attempt to test 95 with some chances of a break in the downside to head towards 94.50. Note that 95 itself is a crucial support, only a sustained break below it will bring in 94.50 into the picture. Aussie and Pound looks mildly bullish for the next couple of sessions.

The US Treasury Yields have dipped. They can test their support in the near term and then reverse higher to resume their broader uptrend. The US CPI data release today will need a close watch. The German Yields are coming down as expected towards their support. We expect the support to hold and the yields to reverse higher going forward. The broader trend remains up. The 10Yr GoI has dipped after the strong surge seen on Monday. Immediate support is there to limit the downside. The 10Yr GoI remains bullish and can rise further.

Dow remains weak below 52000 with room to fall towards 51500 or lower. DAX can decline towards 24800 on a decisive break below 25000. Nifty is capped near 22800, with a reversal likely towards 22600-22400. Nikkei needs a sustained move above 68200 to advance towards 69000, else it can fall towards 67000. Shanghai remains weak below 3800 and can fall towards 3700.

Brent faces crucial resistance near $108, with a breakout potentially pushing it towards $110-$112, while WTI could rise towards $100. Gold needs to hold above $4100 to retain the possibility of a rise towards $4300-$4400, while Silver could decline towards $58-$57 if it remains below $60. Copper can rise towards $6.80-$6.85, while Natural Gas could extend its rally towards $3.50 amid tightening domestic supplies due to increased US exports.

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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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