Morning briefing: The US treasury yields have come down further

Vikram Murarka Kshitij Consultancy Services

The Dollar Index looks bullish towards 103.55-104 while above 102.50. The Euro has slipped below 1.09 but needs to break below 1.0875 to extend to 1.08-1.07. The USDJPY and EURJPY have a fair chance of declining to 148.50/148 and 161 in the near term while below 149.50 and 164. Aussie can test 0.66 while Pound could trade above 1.30. EURINR, below 92.50-92, looks bearish to 91.35-91.00. USDINR has now a revised range of 84.12-84.00/83.90 which can hold for some time while resistance near 84.12 holds. USDCNY can face interim resistance near 7.1240 below which a dip to 7.08/05 looks possible.

The US Treasury yields have come down further. So, the resistances have held very well. A further fall from here will confirm the same and will indicate that the downtrend has resumed. More fall is on the cards. The German yields have come down. Supports are there near current levels which have to hold to avoid more fall and negate our bullish view. The ECB meeting tomorrow will need a close watch. The 10Yr GoI remains stuck inside the narrow range. As mentioned yesterday the sideways consolidation can continue for some more time before a rise happens.

Most major indices are negative. The Dow Jones failed to break through resistance at 43200, declining to 42700, and now appears bearish, with potential to test the support level near 42600/500. The DAX also closed lower, but as long as it remains above 19100/19000, a rise towards 19,800-20000 is still possible. The Nifty continues to struggle to break above 25,200. A move past 25200 is necessary to mitigate downside risk; failure to hold above 25000 could lead to a further drop to 24,750. The Nikkei, after failing to sustain above 40,000 in the previous session, sharply declined to 39000. A break below this level could extend losses to 38000. Shanghai is currently holding above the key support level of 3,180. As long as this support holds, the index is likely to trade within the 3200/3180 to 3300 range.

Crude prices fell sharply due to lower demand estimates by OPEC and an easing war scenario between Iran and Israel. The prices can extend fall to 70 on Brent and 65 on WTI in the near term. Gold may remain range bound between 2700-2620 for some time. Silver has risen slightly and can target 32.5-33.0 in the upcoming sessions. Copper and Natural Gas look bearish towards 4.30-4.35 and 2.40-2.35 respectively for 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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