Morning briefing: Will EUR/USD break higher and test 1.1500?

Vikram Murarka Kshitij Consultancy Services

A major selloff was witnessed yesterday in the US Stocks, Bonds, which in turn weakened Dollar. The Dollar Index slipped to the low of 99.70 yesterday. Currently it has recovered a bit but still looks vulnerable to fall to 98. The Index will have to sustain above 100 and rise higher to negate the fall. The Euro and EURINR has risen past 1.12 and 97 respectively. If the pairs sustain above 1.12 and 95, can extend it further to 1.14/15 and 98-99 respectively. EURJPY is rising within 160-164 range. USDJPY slipped below 144 and failure to rise past it can drag it further to 140 in the near term. AUDUSD has risen past 0.61 and can test the resistance near 0.63-0.635 in the coming sessions. The USDCNY is coming off from 7.35 and if the fall continues further, can get extended to support near 7.28. Pound tested 1.30 as anticipated and if sustained, can head towards 1.32 as well. USDINR was closed yesterday. It is currently trading near 86.21, and while it stays below 86.80, a further decline towards 86.10–86.00 looks likely in the near term. Watch out for the US PPI data release scheduled today.

The US Treasury yields are holding higher. The view remains bullish to see more rise from here. The resistance-turned-support levels can limit the downside. The German yields have declined below their support. While this sustains, more fall is likely from here and will negate our earlier bullish view. The 10Yr GoI is coming down to test its key support. We expect the yield to sustain above this support and rise back going forward.

The Dow Jones has again fallen below 40000, and the index is oscillating between 36600-40800. DAX retraced down to 20500 after rising to 21300. It needs a rise back above 21300 to negate the downside fall towards 19600. Nifty has support near 22000, while above this level, the outlook remains positive for seeing a rise to 22800-23000. Nikkei is holding above 33000; as long as this support holds, it can rise towards 36000. Shanghai has risen above 3200 and looks bullish towards 3280-3300.

Brent and WTI have dipped again after a brief recovery, with a bearish outlook targeting $55 and $50, respectively. Gold is approaching resistance at $3,300, with a possible dip to $3,100–$3,000 unless it breaks higher. Silver remains weak below $32, likely heading toward $28–$26. Copper is trending upward towards $4.60. Natural gas is holding support, with potential to rise to $3.60–$3.80.

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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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