Morning briefing: Pound has slipped below 1.2500

The outlook on most currencies looks uncertain as there is no directional clarity for the medium term. Most of them have breached crucial supports/resistances and need to sustain to confirm the medium-term direction. The Dollar Index has extended to 108.485 on the stronger US GDP release, the Euro is trading below 1.04 with the possibility of a support zone near 1.0330-1.0300 likely to hold. Both DXY and Euro can target 110 and 1.0330 if the current momentum holds. EURINR is stuck within 89.50/90-88 region. Aussie has immediate support around 0.62, above which it has a scope to bounce back towards 0.6300-0.6350 while the Pound has slipped below 1.25 and can extend to 1.24/23 in the coming sessions. USDJPY tested 157.93 much sooner than expected. It can rise further on Dollar strength. Similarly, EURJPY needs to be watched around current levels. A break past 163/164 can turn bullish. USDINR has risen past 85 and can extend towards 85.10/20 before a corrective dip is witnessed in the near term. Watch out for US Personal Income & US PCE data release scheduled today.

The US Treasury yields have risen well above their key resistances. While this sustains, there will be room to rise more in the coming days. The German yields have risen sharply. Bullish view is intact, and the yields can rise further. The 10Yr GoI is coming close to its key resistance. We expect the resistance to hold. The yield can reverse lower and resume its broader downtrend.

The Dow Jones initially attempted a corrective rise to 42,800 but failed to sustain intraday gains. Support near 42100 will have to hold to produce a rise else it can fall towards 41,500-41,300. DAX dropped below 20,000, opening the possibility of a fall to 19,500-19,400. Nifty slipped below 24,000 but there is support at 23,800-23,600 which is expected to hold and provide a base for recovery. Nikkei remains below 39,000, maintaining a bearish outlook towards 38,000. Shanghai continues to trade below 3,400, with a bias for further declines towards 3,300.

Crude prices continues to fall as Dollars strengths further. The prices may remain ranged between 75-71 (Brent) and 72-67 (WTI) for the upcoming weeks. Gold holds above 2600 and can bounce back towards 2650-2700. Silver and Copper has fallen and can continue fall further towards 29 and 4.05 respectively in the near term. Natural Gas has risen sharply and looks bullish towards 3.8-4.0 while above 3.6.

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