Market Morning Briefing: Euro Has Immediate Support Near 1.1255

STOCKS

Most indices have fallen globally and need to bounce back from respective supports to keep the near term ranges intact. Dow and Dax have fallen and need to hold above 35000 and 15500 to move up again in the coming sessions. Nikkei too needs to sustain above 28000 to move up slowly. Shanghai has held below 3700 and can fall towards 3650-3600. Nifty and Sensex can see a fall today.

Dow (35650.95, -320.04, -0.89%) has come down sharply breaking below the support at 35750. A test of 35000 is possible now before we see a rise again.

DAX (15621.72, -1.59, -0.010%) has come down after testing a high of 15794.31. The range of 15800-15500 mentioned previously has held very well. Any break above 15800 if seen and sustained can take the index towards 15900 or higher soon. While below 15800, we continue to look at 15800-15500 to hold.

Nikkei (28504.15, -136.34, -0.48%) has managed to close above 28500. While above 28500, a slow rise to 29000/29500 is possible. Else, a sharp fall below 28500 will indicate bearishness towards 28000.Watch which way the index moves from here.

Shanghai (3664.59, -16.49, -0.44%) has come down today. The resistance mentioned at 3700 has held well. While below 3700, a fall back to 3500 is possible.

Nifty (17368.25, -143.05, -0.82%) fell sharply yesterday after opening higher. While below 17400, a fall towards 17200 /17000 is possible in the coming sessions. Upside is limited to 17800 in the very near term.

Sensex (58283.42, -503.25, -0.86%) has come down yesterday. A range of 58000-59000 is possible before we see a break on either side.

COMMODITIES

Crude prices have moved up well but have immediate resistances coming up which if holds can produce a fall again soon. Watch price action near 77 on Brent and near 73 on WTI which if hold can produce a decline. Gold and Silver are ranged within 1760-1790 and 21/22-24 respectively and may move up which supports hold. Copper can trade within 4.40-4.25 before breaking on either side of the range.

Brent (73.96) and WTI (70.81) have both fallen sharply as expected. Brent may trade within 77/78-74/73 for now and a break below 73, if seen can take it further down in the medium term, while WTI can range within 70-73/74. Unless a break on either side is seen, we would continue to see the mentioned ranges to hold.

Gold (1787.10) an Silver (22.24) have both been stable and need to show a sharp movement on either side to indicate the direction from here. We look for a range of 1790-1760 for Gold and 24-21 on Silver to hold for the medium term.

Copper (4.2630) is testing the immediate support near 4.25 which if holds can take it higher to 4.40/45. We continue to look at the 4.40-4.25 range unless broken on either side.

FOREX

Dollar Index has risen and could be headed towards 96.60-97 before falling from there. Euro too can fall to test 1.1255 before bouncing back from there. The broad range of 114-112 is holding for now. EURJPY is ranged within 129-127.50 while Pound looks likely to break below 1.32 to head towards 1.3150or lower. Dollar Yen can rise towards 114 while the Dollar Index rises. USDCNY is bearish for a slow fall to 6.34. USDINR can test 76.0-76.20 before reversing from there.

Dollar Index (96.415) bounced back from 96 yesterday and continues to rise today. A test of 97 can be possible on a break above 96.60 but thereafter we need to see which way the index moves. We continue to look at the broad 97-95.50 range for the near term.

Euro (1.1280) has immediate support near 1.1255 which needs to hold in order to see a rise to 1.1350 or higher. As mentioned yesterday, we look for a broad range of 1.12-1.14 to hold for now.

EURJPY (128.18) seems to be fluctuating within 128.50-127.65 over the past 3-sessions. A broad 129-127.50 range is holding for now and unless we see a break on either side of the range, it is difficult to get clarity on further direction from here.

Aussie (0.7111) has fallen over yesterday and today to head to the lower end of the 0.72-0.71 range mentioned yesterday. If it manages to break below 0.71, it can drag itself lower towards 0.7050 or even 0.70 before attempting to bounce back from there.

Pound (1.32) has fallen and seems to be on the verge of breaking below 1.32 to head lower towards 1.3150 soon. If it does not manage to bounce from 1.1350, it can be vulnerable to further bearishness in the longer run. Watch price action near 1.3150.

Dollar-Yen (113.64) is holding well below immediate support at 113.20 and needs to break above 114 to head higher. Till then the 112-114 range may continue to hold.

USDCNY (6.3660) rose slightly but is broadly bearish for a fall to 6.34 soon. Thereafter we need to see if it breaks further below 6.34 to head towards 6.30. Overall medium term trend is bearish.

{USDINR (75.77) dipped initially yesterday but bounced back to close higher. A rise above 75.80/85 today can pave way for a test of 76.0-76.20 on the upside before a reversal sets in.

INTEREST RATES

The US Treasury yields have declined sharply at the far-end yesterday. We expect the yields to remain in a broad sideways range. While the range holds, the chances are high for the yields to move up within the range in the coming weeks. Can the US Federal Reserve meeting outcome tomorrow provide the possible trigger to move up? We will have to wait and see. The German yields are coming down in line with our expectation and are keeping our bearish view intact. The European Central Bank (ECB) meeting on Thursday will need a close watch. The 10Yr and 5Yr GoI continues to trade mixed within their broad range. We see chances of a rise in the near-term within the range before coming down again.

The US 2Yr (0.64%), 5Yr (1.21%), 10Yr (1.42%) and the 30Yr (1.80%) yields have declined sharply. We reiterate that 1.35%-1.65% (10Yr) and 1.7%-2% (30Yr) will be the broad range of trade possible for some time. While above 1.35% (10Yr) and 1.7% (30Yr) we retain our view of seeing a rise within this range 1.65% (10Yr) and 2% (30Yr) in the coming weeks.

The German 2Yr (-0.72%), 5Yr (-0.61%), 10Yr (-0.39%) and 30Yr (-0.08%) yields are coming down in line with our expectation indeed, a little sharply at the far-end. Our bearish view of testing -0.45% / -0.5% (10Yr) and -0.1% / -0.2% (30Yr) on the downside remains intact.

The Indian 10Yr (6.3707%) and 5Yr (5.6884%) continues to trade mixed within their broad range. 6.3%-6.4% on the 10Yr and 5.62%-5.73% on the 5Yr is the preferred range of trade. On the charts, though a two-way possibility looks likely from here, the bias remains inclined towards seeing a rise towards the upper end of the above-mentioned ranges before the 10Yr and 5Yr GoI comes down again.