Morning briefing: Euro has slipped below 1.0400

Vikram Murarka Kshitij Consultancy Services

The Dollar Index gained strength post the ECB rate cut, but whether it extends further towards 109 or not can be determined after the US PCE & Personal income scheduled today. Euro has slipped below 1.04 and failure to rise back above it can make the pair vulnerable to test 1.0350-1.0300 on the downside. EURINR can trade within 91-90 region until a decisive break is seen. USDJPY contineus to trade below 155 and if sustained, can get dragged towards 150 soon. EURJPY, AUDUSD and Pound are trading near the lower end of their respective ranges of 164-160, 0.63-0.62 and 1.26-1.24. USDCNY is closed today. USDINR is trading above 86.60 on the offshore and if the rise continues, a test to 86.80 looks likely to happen.

The US Treasury yields remain stable. There is little room to fall from current levels before resuming the broader uptrend. The US PCE data release today will need a close watch. The German yields have come down as expected from near their resistance. That keeps intact our bearish view. The ECB cut the rates by 25-bps yesterday. The 10Yr GoI remains lower. It may consolidate sideways for some time and then rise eventually.

The Dow Jones rebounded after opening lower at 44548. While holding above 44500, it could advance towards 45100-45250. DAX has moved higher, approaching 21900, after which a potential reversal may be seen. Nifty needs to break above 23400 to confirm a move towards 23700–23800 and negate the downside risk to 22800–22500. Nikkei remains stable around 39500. A sustained move above this level could push it towards 40000; otherwise, a decline towards 39000–38000 remains possible.

Crude oil prices are testing their immediate support levels, and a decisive break below this could drive prices down toward $73-72 and $72-69, respectively. Gold and Silver have both broken to the upside. Gold is encountering significant long-term resistance near the $2850/2870, which may limit further upward movement in the near term. Meanwhile, Silver appears poised for bullish momentum, potentially targeting $33.5-34.5. Copper and Natural Gas remains bearish, with potential downside targets at $4.1 and $3.0-2.8, respectively, over the coming weeks.

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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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