Sun, Dec 05, 2021 @ 18:03 GMT
HomeContributorsTechnical AnalysisMarket Morning Briefing: EURJPY Bounced From 131.86

Market Morning Briefing: EURJPY Bounced From 131.86

STOCKS

Some recovery is seen in equities globally. Dow and Dax seems to hold well above 35500 and 15400 and could be headed towards 36000 and 15800/900 respectively. Nikkei and Shanghai also look bullish for a rise to 29500 and 3700/800 on the upside. Nifty and Sensex seems to be holding above crucial supports at 18000 and 60000 respectively and while a above that, a slow and steady rise looks possible.

Dow (35741.15, +64.13, +0.18%) has risen and is heading towards the immediate resistance at 36000. Note that 36000 is a strong resistance which can hold and produce a fall towards 35500-35000 in the coming sessions.

DAX (15599.23, +56.25, +0.36%) has held within the range of 15800-15400 mentioned previously. View remains bullish to see a test of 15800/900 in the coming sessions while above 15400.

Nikkei (29100.57, +500.16, +1.75%) has risen sharply today from a low of 28472.55.The range of 28000-29500 remains intact. A strong break above 29500 is needed for the view to be bullish towards 30000.While below 29500,it can continue to consolidate between 28000-29500 for a few more sessions.

Shanghai (3611.15, +1.29, +0.036%) has risen above 3600 and while the bounce sustains, view remains bullish to test the level of 3700/800 eventually. Watch interim possible resistance at 3675.

Nifty (18125.40, +10.50, +0.058%) made a low of 17968 yesterday but bounced well to close above 18100. The level of 18000 needs a close watch today to see if it holds and keeps the bullish view of seeing 18600/800 intact or gives way for the index to again fall lower. A strong break if seen below 18000 can trigger a sharp fall towards 17400 levels (looks less likely).

Sensex (60967.05, +145.43, +024%) closed over the support of 60000 yesterday. Note that 60000 is a strong support from where the index can bounce towards 61000/62000 again on the upside. Any break below 60000, if seen would be bearish.

COMMODITIES

Commodities trade higher. Gold has broken above 1790 and could be bullish towards 1820-1840 while above 1790. Silver may head towards 25. Copper has bounced and while above 4.45, a rise to 4.60/70 is possible. Crude prices may head higher towards 86/87 on WTI and towards 87.36-90 on Brent before any reversal is seen.

Brent (86.21) and WTI (83.21) have dipped slightly bit overall remains higher with scope of rising towards 87.36-90 on Brent while above immediate support at 85. WTI test 86/87. Immediate view is bullish.

Gold (1805.10) has broken above 1790 and risen well and while above 1790, there is scope for a rise to 1820-1840 in the near term.

Silver (24.52) has 25 as immediate resistance and while that holds, a dip to 24-23.50 is possible on the downside. Only a break above 25 if seen will open up further chances of a rise towards 26-27 again in the longer run. Watch price action near 25.

Copper (4.5450) has bounced from 4.45 and while that holds, a rise towards 4.60/70 is possible in the near term. On the downside there is still scope for a fall towards 4.35/30 which will come into force on a break below 4.45.

FOREX

Dollar Index rose and Euro fell after the German IFO data release yesterday. This has kept Dollar Index above 93.50 and Euro below 1.1665/75 reducing immediate chance of a fall to 93 and a rise to 1.17/1.1710 respectively. Watch price action to see if the current move sustains. EURJPY has started to rise and while above 131.00/50, view is bullish for a rise to 133. Aussie and Pound are bullish for the near term. USDCNY may hold above 6.3750 and rise to 6.41/44 in the near term. Only a break below 6.3750 will turn the view to become bearish. A stronger crude (refer to commodities section above) and a weak Euro may be negative for the Rupee and could take USDINR towards 75.20/25, the immediate resistance above 75.

Dollar Index (93.91) rose yesterday from interim support near 93.50 and while above 93.50, there is scope for a rise to 94.50 on the upside in the near term. Immediate view is bullish while above 93.50.

Euro (1.1598) fell back sharply from immediate resistance zone of 1.1665-1.1675 after the German IFO data release yesterday. This has reinforced a possible decline to 1.1550-1.1500 if it does not immediately bounce back to 1.1625+ levels today. Watch price action to see if the fall sustains below 1.16 or rises back higher over the next couple of sessions. Chances of a rise to our expected levels of 1.17-1.1710 seems reduced for now.

EURJPY (132.15) bounced from 131.86 and can move up towards 132.50-133 on the upside. While above 131.00/50, view is bullish.

Aussie (0.7505) has moved up from 0.7450 and has scope to test 0.7550.

Pound (1.3769) seems to be holding well above trend support near 1.3735/30 mentioned yesterday and a bounce is likely to take the exchange higher towards 1.38-1.3850 slowly in the near term.

Dollar-Yen (113.87) continue the bounce seen yesterday. It seems to have resumed the uptrend towards 114-114.50 and is bullish for the near term while above 113.

USDCNY (6.3818) has dipped slightly but holds above 6.3750. If it manages to hold above 6.3750, we may expect a rise back to 6.41/44 in the near term else a fall towards 6.36/34 cannot be negated in the medium to long term. Watch price action near 6.3750.

USDINR (75.0825) is likely to rise towards resistance near 75.20/25 on the upside and could be supported by a strong Crude and weak Euro. Watch price action near 75.20/25 to see if the pair faces rejection or manages to break on the upside.

INTEREST RATES

The US Treasury Yields have dipped at the near-end (2Yr and 5Yr) while the far-end (10Yr and 30Yr) remains stable. The yields at the far-end have still chances to move up further from here. The German yields have key resistances ahead that can cap the upside and trigger a fresh fall in the coming days. The 10Yr GoI remains stable and can consolidate at higher levels in the range of 6.3%-6.4% before seeing a fresh fall. The 5Yr continues to remain mixed within its broad 5.66%-5.76% sideways range.

The US 2Yr (0.44%) and the 5Yr (1.18%) yields have dipped slightly while the 10Yr (1.64%) and the 30Yr (2.09%) remains stable. Our view remains the same. There are still chances for the yields to test 1.75% (10Yr) and 2.2% (30Yr) while they remain above 1.6% (10Yr) and 2% (30Yr). As mentioned yesterday, the 10Yr will have to break below 1.6% to give an initial sign of weakness and then extend the fall below 1.5% in order to negate the chances of 1.75% and a rise to 2% levels going forward.

The German 2Yr (-0.68%) and the 5Yr (-0.46%) have dipped further while the 10Yr (-0.12%) remain stable. The 30Yr (0.26%) has bounced back slightly but is unlikely to sustain higher and can keep the bearish view intact of falling to 0.1%-0% on a break below 0.2%. The 10Yr has resistance in the -0.1%/-0.05% resistance zone which can cap the upside and drag the yields down to -0.2% and lower in the coming weeks.

The Indian 10Yr GoI (6.3503%) seems to be getting support near 6.33%. It can oscillate in a range of 6.3%-6.4% for some time. The broader view remains bearish while below 6.4% to see 6.2% and lower levels. A strong break above 6.4% is needed to move further up towards 6.45%-6.5%.

The 5Yr GoI (5.7218%) continues to remain mixed and trades stable within the broad 5.66%-5.76% range. 5.7%-5.76% could be a narrow range of trade for now within the broad 5.66%-5.76% range.

 

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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