Thu, Jul 29, 2021 @ 11:41 GMT
HomeContributorsTechnical AnalysisMarket Morning Briefing: Dollar-Yen Is Finally Inching Up Towards Our Expected 110

Market Morning Briefing: Dollar-Yen Is Finally Inching Up Towards Our Expected 110

STOCKS

Dow oscillates around 34500 and has chances of testing 34000 before moving up. Broader trend is up. DAX keeps the bullish view intact of seeing 15800 and 16000. Nikkei can rise to 29500-30000 if it sustains above 29000. Support is at 28500. Shanghai is closed today. Sensex and Nifty continue to move up and are keeping the bullish view intact. As mentioned last week, Sensex and Nifty remain stronger among the lot and can outperform others.

Dow (34479.60, +13.36, +0.04%) oscillated around 34500 on Friday. A near-term dip to 34000 looks likely. But the overall trend is up with strong support at 34000 and 33500. While above these supports the bullish view is intact to see a break above 35000 and a rise to 36000 in the coming weeks.

DAX (15693.27, +122.05, +0.78%) is getting fresh buying below 15600. This keeps our bullish view intact of seeing a rise to 15800 and 16000/16100. Support below 15600 is at 15400 which has to be broken to bring DAX under pressure.

Nikkei (29106.69, +157.96, +0.55%) has risen above 29000 and needs to see if it can sustain above it and move up further towards 29500-30000. As we have been mentioning for some time, a strong break below 28500 will only turn the outlook bearish and bring in the danger of a fall to 27000-26000.

Shanghai (3589.75) is closed today.

Nifty (15799.35, +61.60, +0.39%) remains higher and can gain momentum on a strong break above 15800. It will pave way for 16000 initially and then to 16200-16500 eventually over the medium-term. Strong supports are at 15600 and 15400.

Smilarly, Sensex (52474.76, +174.29, +0.33%) can gain strength on a break above 52500. The bullish view is intact to see 53000-54000 in the coming weeks. Immediate support is at 52000.

COMMODITIES

Crude prices have risen well and look bullish for the near term while Gold and Silver trade lower and may fall over the next 1-2 sessions before attempting to bounce a bit. Copper has bounced well and could remain ranged within 4.45-4.60 in the near term.

Brent (73.02) and WTI (71.23) both have risen well and look bullish in the near term. The rise is expected to have been seen on demand recovery hopes. Brent could head towards $75-77 soon on the upside while Nymex WTI can head towards $72-75 in the near term. Immediate view looks bullish but we may expect some volatility this week after the FOMC policy meeting scheduled on 16th June.

Gold (1865.30) has fallen sharply to test support at 1860. Failure to remain above 1860 would make Gold vulnerable to a fall towards 1840-1820 on the downside before any bounce can take place. That said, a possible rise in Dollar Index towards 91-91.50, if seen would be bearish for Gold in the near to medium term limiting the immediate upside to 1920/00. Watch price action on Dollar Index (refer to FOREX section below)

Silver (27.88) is holding below crucial resistance at 28.50 and while that holds, we may expect a fall towards 27.50-27.00 in the near term. While above 27, the broad range of 27-28.50 may continue to hold.

Copper (4.5395) has risen a bit and needs to continue the rise to test higher levels of 4.58/60 again in the near term. Immediate range of 4.45-4.60 may hold for now.

FOREX

Dollar Index has risen well and may test 91.0-91.50 on the upside if it sustains a rise above 90.60. That could be bearish for most currencies globally. EURJPY, Euro, Aussie and Pound look weak and can fall in the near term towards 132.48, 1.2050/25, 0.7650 and 1.4070 respectively. Dollar-Yen has risen along with Dollar Index and can test 110 soon. USDCNY has risen too and may head towards 6.40/41. USDINR has scope for a rise to 73.50 on a break above 73.30 if seen today.

Dollar Index (90.54) has risen well and a break above 90.60, if seen may take it higher towards 91-91.50 on the upside which could be bearish for most currencies globally. A fall from 90.60 is needed for the index to again fall back to 90 in the near term.

Euro (1.2103) has fallen well and has scope for a further fall towards 1.2050-1.2025 or even lower in the near term. Watch price action near 1.21 just now.

EURJPY (132.82) has fallen as expected and can now test 132.48 before a possible rise is seen. Only a break below 132.48, if seen would take the cross lower towards 132 in the medium term. Watch price action near 132.48.

Dollar-Yen (109.75) is finally inching up towards our expected 110. Immediate view is bullish. A fall from 110 could be seen in the medium term. Immediate support is seen enar 109.30.

Aussie (0.7703) has fallen well and could test 0.7650 which if holds could produce a bounce back towards 0.78 in the near term. Failure to bounce from 0.7650 could make Aussie vulnerable to a sharp fall breaking below the current sideways range of 0.7650-0.78.

Pound (1.4114) is stuck within the range of 1.4070-1.42 and unless a break on either side is seen it would be difficult to give more clarity on further direction. If the dollar index rises from current levels in the near term, Pound could fall towards 1.40.

USDCNY (6.3967) has risen a bit and could follow a range of 6.38-6.41 for the near term.

USDINR (73.0725) has scope for a rise to 73.30 on the upside. A break above 73.30 if seen in the near term will accelerate the rise towards 73.50. Watch price action near 73.30 while support near 72.90/80 holds well for now.

INTEREST RATES

The US Treasury yields remain lower and can test their crucial support ahead of the US Federal Reserve meeting. The outcome of the Fed meeting on Wednesday could be key in deciding whether the yields can sustain above their support and rise back or not. We will have to wait and watch. The German yields are likely to reverse higher in the coming days from their key supports and keep the overall uptrend intact. The 10Yr GoI continues to consolidate in the narrow range. The broader trend is down and the yield is likely to break this range on the downside eventually.

The US 2Yr (0.15%), 5Yr (0.75%), 10Yr (1.46%) and 30Yr (2.15%) Treasury yields hovers above their crucial supports. 1.40% (10Yr) and 2.10% (30Yr) are important levels that will have to hold to prevent a much deeper fall to 1.25%-1.2% (10Yr) and 1.9% (30Yr) and signal a trend reversal. The yields will have to sustain above 1.40% (10Yr) and 2.105 (30Yr) to keep the overall uptrend intact and see a rise back to 1.6%-1.7% (10Yr) and 2.3%-2.4% (30Yr) levels in the coming weeks.

The German 2Yr (-0.69%), 5Yr (-0.64%), 10Yr (-0.27%) and the 30Yr (0.28%) yields trades near their key supports. We expect the yields to see a fresh rise from 0.25% (30Yr) and -0.30% (10Yr) and keep the overall uptrend intact. Our broader bullish view remains intact to see 0% (10Yr) and 0.55% (30Yr) on the upside over the medium-term.

The 10Yr GoI (6.0096%) remains stable inside the 6%-6.04% range within its overall downtrend. The bias is bearish and we expect the yield to break below 6% and fall to 5.95% and 5.9% eventually in the coming weeks.

 

Kshitij Consultancy Servicehttp://www.kshitij.com
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

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