Morning briefing: Euro is coming off as expected

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is holding well above the immediate support around 107.75-108.00, above which targets of 110-111 remains intact in the near term. Euro is coming off as expected and a fall to 1.03 or even lower can be witnessed, while below 1.05. EURINR and AUDUSD continues to remain volatile within the 90-88 and 0.63-0.62 region respectively. USDJPY, on a sustained rise past 158 can head towards 160 or higher in the coming sessions. Pound and EURJPY are holding well below immediate resistances coming at 1.26 and 165 respectively. EURJPY has interim support at 163 but a rise past 165 will be needed to maintain its bullishness. Pound can extend the fall to 1.22 or lower, while below 1.26. USDCNY can gradually head towards 7.35. USDINR had slipped to the low of 85.6475 before rising back higher yesterday. A confirmed break past 85.80 can take it towards 86 in the current week itself. Watch out for the US ADP Employment data release scheduled today.

The US Treasury yields have risen sharply and are moving up in line with our expectation. There is room to rise more from here. The German yields are getting a strong follow-through rise above their intermediate resistance. The extended rise is in progress now and yields can move up further. The 10Yr GoI remains lower. Outlook is negative and the yield can fall more.

The Dow Jones, as expected, continues to decline, extending the downside towards 42000-41800. DAX has risen well above 20200, paving the way for a potential rise towards 20700. Nifty remains confined to the range of 23500-24100. A break above 23800 is essential to target the upper boundary of this range. Nikkei is unable to sustain above 40000 and is trading lower. A decisive rise past 40000 is needed to resume a bullish move towards 41000-42000. Shanghai holds below 3250 and could continue trading within the range of 3250-3150.

Brent and WTI can fall towards $75-74 and $72-71 respectively in the near term. Gold, Silver and Natural Gas remain bullish towards 2700-2750, 31.0-31.5 and 3.8-4.0 respectively. Copper looks ranged between 4.20-4.00 for some time.

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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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