Morning briefing: Euro is attempting to rise back

Vikram Murarka Kshitij Consultancy Services

The Dollar Index needs to rise past 102.75 to make the outlook further bullish. Else it can get dragged towards 102 or even lower. The Euro is attempting to rise back. A confirmed break past 1.10 if seen, can take it higher to 1.1050. Failure to do so can lead to a fall to the support of 1.09. USDJPY and EURJPY are coming off contrary to our bullish view to 150-151 and 164 respectively. If the fall continues, a test of 146 and 161 is likely. Aussie continues to fall further. Watch price action closely around current levels. The Pound looks stable around the current levels. A rise past 1.31 will be needed to make the outlook bullish again else, it has a fair chance of testing 1.30-1.29 before rising back. EURINR may trade within 94-92.50/92 for now. USDINR below 84-84.10 can fall back towards 83.80/70 in the coming sessions. Watch out for the US Trade Balance data release scheduled today.

The US Treasury yields are witnessing an extended rise. The expected reversal will now happen after seeing some more rise from here. The German yields have risen above their resistance contrary to our expectation to see a reversal. This can take the yields further higher in the coming days. The 10Yr GoI continues to move up and is keeping intact our bullish view. The RBI meeting outcome tomorrow will be important to watch.

The Dow Jones fell below 42000, driven by rising uncertainty in the Middle East. Watch if 41750 holds to give more clarity on whether the index will bounce back or fall further towards 41000. The DAX remained stable but closed lower. Meanwhile, the Nifty index has declined to its 24800-support level. Only if this support holds, the bullish outlook targeting 26000 and higher remains intact; otherwise, a drop to 24500/300 is possible. The Nikkei lacks the momentum to break past 39500. Shanghai reopened after a week-long break, gapping up to 3674.40 but the rally seems to be frizzing out and leading to a decline instead.

Crude prices rose sharply to their immediate resistance levels as expected. While the levels hold a broad range of 81-70 in Brent and 71-60 in WTI can be seen for the medium term. A sustained break above 81 and 71 could turn further bullish and could come into the picture if the Middle East tensions rise on any retaliation seen from Israel. Gold and Copper look ranged between 2700-2640 and 4.7-4.5 while Silver and Natural Gas can fall towards 31.5-31.0 and 2.6 respectively in the near term.

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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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