Market Morning Briefing: Euro Has Dipped Below 1.21 And Trades Lower

STOCKS

Stocks continue to trade mixed and struggle to find direction. Dow is around 34000 and DAX hovers above 15200. Nikkei is stable within its range 28000-31000. Shanghai can enter its 3350-3500 range. Sensex and Nifty have come to the upper end of their range 47000-49000 and 14150-14700 and need to see if they can break this range up or not today.

Dow (33984.93, +3.36, + 0.01%) is blocked around 34000. We repeat that a strong post-growth above 34000 is absolutely necessary to rise to 35000. Significant support is at 33500. A break below it will reduce the chances. of seeing 35000 on the top. A subsequent fall below 33000 will then turn the bearish outlook to see 32000-31000 at a disadvantage.

DAX (15249.27, −47.07, -0.31%) remains stable above 15200 and continues to lack momentum. We expect 15500 and 15700 to limit the top from here. DAX is likely to break below 15000 and fall to 14500-14000 eventually in the coming weeks.

Nikkei (29105.88, +113.99, + 0.39%) remains stable above 29000. Nikkei broadly trades in the range of 28500-30500 (narrow) or 28000-31000 (wide). In this range, while above 29000, an increase to 30000-30500 is possible soon.

Shanghai (3448.02, +5.41, + 0.16%) gets support close to 3425 and tries to rebound. This could be short-lived. We expect Shanghai to fall to the lower end of its 3350-3500 range in the coming days.

Nifty (14653.05, +168.05, + 1.16%) and Sensex (48944.14, +557.63, + 1.15%) approached the upper end of their respective range of 14150-14700 and 47000-49000. We expect this range to hold and keep intact the broader bearish view. Both Nifty and Sensex can reverse below 14700 and 49000 respectively. This view will be negated if the indices manage to break above 14700 (Nifty) and 49000 (Sensex) decisively. In that case a further increase to 15000-15150 (Nifty) and 50000-51000 (Sensex) is possible.

GOODS

OPEC + has canceled the meeting scheduled for today and announced that it will continue to reduce oil production with an increase of 350,000 b / d and an additional 350,000 b / d by Saudi Arabia. Crude prices have risen slightly, but generally remain between the narrow region 68-64 in Brent and 65-60 region in WTI. Gold and Silver have fallen slightly and may continue to trade lower for a few sessions before a sharp rebound is seen. Copper has drastically declined, but while above 4.30 / 40, there is still a possibility to bounce back to 4.60 mid-term.

Brent (66.33) and WTI (62.86) rose slightly and could stay between 70 / 68-64 and 67 / 65-60 respectively. While Brent is holding above 65, it has an option for growth to 70. Similarly, while WTI is trading above 60, there is an option for growth to 65-67.

Gold (1771.80 looks stable after falling during the last sessions. It is important that the price stays above 1760 to keep alive hopes of a rebound to 1800-1820 in the medium term.

Silver (26.10) fell slightly and could test 26.0-25.75 before trying to bounce again.

Copper (4.4360) declined from levels seen yesterday and the fall could be briefly corrected before resuming the upward slowdown to 4.60 in the medium term. Immediate support is visible in the region 4.40 / 30.

FOREX

Dollar Index looks stable while Euro may trade below 1.21 for some time. EURJPY has grown sharply and if it manages to stay above 131, we may be looking for new targets of 132-135 in the longer term. Pound and Aussie look low at 1.38-1.37 and 0.77-0.7680 soon. USDCNY’s expectations have fluctuated within 6.48-6.50 at present while USDJPY has grown well and needs to stay below 109 to fall back to 107; otherwise an increase to 109.75 cannot be ruled out. USDINR may hold today at 74.40-74.80. A break below 74.40, if seen, may lower it to 74.25. Resistances are seen at 74.85 and 75.10.

Dollar Index (90.99) is holding stable and is likely to rise to 91.30 / 50 in the near term before falling again to 90.50 or lower. Note that for over 9050, we may expect a varied move between 90.50-91.50 for some time.

Euro (1.2078) has risen slightly, but while below 1.21, there could be a short corrective fall to 1.2048 before it tries to bounce back to higher levels.

EURJPY (131.50) has finally risen above the 129-131 range and signals initial signs of a sharp build-up to 132-135 in the longer term. See if the cross manages to hold above 131 to continue to climb.

Dollar Yen (108.88) bounced well. It must face a rejection of 109 I order to resume its fall to 107 or less. Failure to face a rejection of 109 will increase it to 109.75 again in the middle of the term.

Australian (0.7739) fell and may continue to fall to 0.77-0.7680 shortly before returning from there. Immediate view is bearish.

Pound (1.3875) looks stable right now. It will probably hold below 1.40 and may fall to 1.38-1.37 eventually. Vista is bearish while below 1.40.

USDCNY (6.4874) is right now. The pair has an option for growth to 6.50 / 52 while downside could be limited to 6.46 soon.

USDINR (74.6550) returned after testing 74.50 yesterday. While below 74.70, there is an option for a test of 74.40. Resistances are seen at 74.85 and 75.10 respectively. We may be looking for a range of 74.40-74.70 / 80 to hold for the day. Only a break below 74.40, if seen, will cause a fall to 74.25. Watch price action at 74.40.

INTERESTS

U.S. Treasury yields quickly rose through tenors ahead of the U.S. Federal Reserve System meeting tonight. The decisive supports have held up very well and keep the overall high trend intact. It remains to be seen whether the outcome of the Fed meeting provides a new trigger for yields to rise further away from here. The German Yields continue to trade steadily and keep the bullish view intact. The 10Yr GoI has bounced but may face resistance ahead and fall back to keep the overall bearish view intact.

U.S. Treasury yields 2Yr (0.18%) remain stable while the 5Yr (0.88%), 10Yr (1.62%) and 30Yr (2.29%) have grown sharply. The support 1.5% (10Yr) and 2.2% (30Yr) seems to hold up well. As mentioned earlier, while above these supports, the higher trend will remain intact and the yields may rise to 1.8% (10Yr) and 2.5% (30Yr) in the coming weeks. The danger of breaking these supports and falling to 1.2% (10Yr) and 2% (30Yr), which we have warned over the last few days, is now being reduced.

The German 2Yr (-0.70%), 5Yr (-0.60), 10Yr (-0.25%) and the 30Yr (0.29%) yields continue to remain higher and stable. We maintain our bullish view to see a break above -0.25% (10Yr) and 0.30% (30Yr) and a rise to -0.20% / – 0.15% (10Yr) and 0.35% (30Yr) in the coming weeks. Then the yields may decrease. To deny the above-mentioned rise, yields will have to fall below -0.35% (10Yr) and 0.20% (30Yr).

The 10Yr GoI (6.0544%) rebounded yesterday but could face resistance at 6.08% and recover again. Our bearish view remains intact to try 6% initially and then 5.90% eventually in the coming weeks.