Morning briefing: Euro price action points to further gains

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is trading within 99-100 region for now. A confirmed fall below 99 can open the doors for 98-96. The Euro and EURINR have supports coming at 1.13 and 96 region, above which we retain our view of seeing a rise towards 1.16-1.18 and 99. EURJPY and USDJPY are holding the ranges of 160-164 and 140-144 respectively. AUDUSD needs to rise past 0.645 to bring 0.66 into picture. Else, it can continue to trade within 0.645-0.635 range. The USDCNY tested 7.2599 before recovering from there. While above 7.26, a rise to 7.28/30 is possible. Pound has upside capped at 1.35/36 region. USDINR below 85.40 can be vulnerable to break below 85 and get dragged towards 854.70/50. Watch out for the US ADP Employment & US Personal Income, US PCE & US GDP data releases scheduled today.

The US Treasury yields continue to fall in line with our expectation. There is room to fall more to test their support. The price action thereafter will need a close watch. The US PCE data release today is important to watch. A lower PCE number may drag the yields further down. The US PCE (YoY) for March is currently at 2.54%. The German yields have reversed lower, failing to sustain the bounce as expected. The bearish view is intact. The yields can fall more. The 10Yr GoI has come down failing to break the immediate resistance. It can remain stuck in a narrow range for some time. We will have to wait and watch.

The Dow is approaching the upper end of its 37,800–41,000 range, with key resistance at 40,800–41,000. DAX looks strong and could rise towards 23,500, while Nifty maintains a bullish bias towards 25,000 with support at 24,200–24,000. Nikkei remains firm and may head to 37,000 before a possible correction. Shanghai is range-bound between 3,250–3,300 and may stay sideways in the near term.

Brent and WTI have declined as expected and may fall further to $62 and $58, respectively. Gold remains bullish above $3,300 with potential to rise towards $3,500, while Silver could head towards $35. Copper continues to weaken and may drop to $4.40. Natural gas faces resistance at $3.50, with a possible decline to $3.00 unless it breaks above for a move towards $4.00.

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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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