Morning briefing: Euro is headed towards support at 1.1000

Vikram Murarka Kshitij Consultancy Services

Major currencies are trading near their potential reversal levels from where either they can rise back or see a corrective fall in the near term. The Dollar Index has risen well on stronger US ADP Employment. A rise past 102 will be needed to maintain the ongoing trend. The Euro is headed towards support at 1.10. USDJPY and EURJPY have risen well on the news of no further rate hikes for now. If the rise sustains, a test to 150 and 164 can happen soon in the coming sessions. The Aussie failed to rise past 0.6950 and started coming off. Immediate support is seen around 0.6850-0.6830 region. The pound has broken below the mentioned range of 1.3440-1.33 and any break below 1.3250 if seen can make it bearish to 1.31 in the near term. USDCNY is closed today. EURINR is nearing the lower end of the near-term range of 94-92.50/92. USDINR was closed yesterday but can open around 83.80 and head higher towards 83.90-84. On the NDF, it had tested 84.02 yesterday.

The US Treasury yields have moved up further. But resistances are there to cap the upside. We can expect the yields to reverse lower and resume the downtrend after some more rise from here. The German yields are coming down in line with our expectation. They can fall more from here and then bounce back again after testing their upcoming supports. The 10Yr GoI is coming down again. It can test its support and then bounce back again.

Dow Jones has risen and sustained above 42000. While above supports of 41900/41700, there could be scope for a rise towards 42800/43000 soon. Dax could see a correction down to 18900/800. Nifty can test 25600/500 before rising higher towards 26500. Shanghai is closed till 7th October for National Day while Nikkei could rally towards 39000/40000 while above 37500/38000. Thereafter, a dip can be seen from 40000 in the medium term.

Volatility in crude prices flared up on escalation in the Middle East tensions after Israel vowed to retaliate against Iran for its missile attack on Israel on Tuesday that could lead to disruption in crude supplies. The crude prices remain at higher levels despite the US weekly inventory build of 3.9mln barrels for the week ended 27th Sep-24. Brent and WTI could dip while below $76 and $70. Gold and Silver may trade within 2700-2600 and 32.50-30.50 while Copper could fall towards 4.5 while below 4.8. Natural Gas has tested crucial resistance at 3 below which a dip towards 2.7/2.6 could be likely.

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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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