Thursday Morning Briefing

(Kshitij Consultancy Services Team)

Most currency pairs look stable within a specific range and needs a break on either side if the range to give more directional clarity.

Dollar Index trades higher leading to dip in Euro but can remain above 1.01 for now. Immediate range for the Dollar Index and Euro are seen at 105-108 and 1.01-1.03 respectively. USDJPY can be bullish to 134 while above 133 else can come down to test 132. EURJPY has risen slightly and is bullish to 137 while above 135. Aussie and Pound can trade within 0.6880-0.71 and 1.20-1.23 respectively while UDRUB can remain within 57-64 unless a break on either side is seen. USDCNY is stuck within a narrow range of 6.78-6.72 while USDINR needs to break above 79.20 to rise to 79.40/50 else can fall off to 79.0-78.90 on the downside.

The US Treasury yields have risen sharply at the near-end while those at the far end remained stable.

The 10Yr and 30Yr will need a strong follow-through rise from here and break the upcoming resistance in order to become bullish. The German yields have bounced but it is likely to be short-lived. The broader view remains bearish, and the yields can reverse lower again. The 10Yr and 5Yr have risen back well but need to get a follow-through rise and break above the immediate resistances to negate any further fall.

Equities look mixed.

While Nifty needs to sustain above 17200 and break above 17400 to turn further bullish, Nikkei needs to break above 28000 to rise to 28500 while Shanghai has been falling over the past few sessions and looks bearish for a fall to 3150-3100 before a bounce is seen soon. Dow on the other hand has risen sharply and can rise towards 33000-34000 soon while Dax has held above support at 13400 and can now be bullish towards 14000-14200.

Crude prices have dipped after the EIA shows a rise in US crude and Gasoline inventories and OPEC+ said to raise the oil output by 100,000 barrels per day in September.

Brent and WTI have fallen sharply to their key supports at 95-93.5 and 90 respectively. A break lower could be further bearish on the downside. Gold could be in a range while below 1800. Silver and Copper can fall further on the downside while below the resistance at 20.5 and 3.52 respectively.

USD recoups some losses

(Jing Ren – Orbex)

USD/JPY bounces back

The US dollar clawed back losses as services PMI exceeded expectations. A bullish RSI divergence indicates a loss of momentum in the sell-off. The pair bounced off the demand zone around 130.50 at the start of the June breakout. This could be due to profit-taking from the short side. A close above 134.50 would help the bulls reclaim control of the price action. From the daily chart perspective, the uptrend is still intact in the medium-term, though there is a chance of consolidation in the coming days.

XAU/USD seeks support

Gold softens as US Treasury yields bounce over solid economic data. The price hit resistance at 1790 which used to be a critical floor on the daily chart. Sentiment has remained cautious after its breakout and the bears could be waiting to sell into strength. A break below 1770 has prompted some leveraged buyers to bail out leaving 1754 as their second line of defence. Its breach could attract momentum selling and extend losses towards 1720. Only a rally back above 1790 would renew buyers’ interest and send bullion to 1825.

US oil breaks critical support

Oil prices slumped after OPEC+ decided to raise output. Downbeat sentiment prevails as WTI struggles to achieve a higher high. The recent rebound came to a halt at 101.80 next to the 30-day moving average. A subsequent fall below 96.50 suggests that the path of least resistance is still down. A break below 91.10 could trigger liquidation towards 85.00, opening the door for a bearish reversal in the weeks to come. 96.20 is the first hurdle and the bulls need to clear 101.80 before a recovery could take place.