Market Morning Briefing: EURJPY Could Test Support At 126

STOCKS

Equities have moved up further breaking above their intermediate resistances. The needed follow-through rise mentioned yesterday is happening and that has reduced the danger of the fall that we have been mentioning for some time. While this break sustains, a further rise is possible in the coming days. Dow can test 31000 while it sustains above 30500 and DAX can move up to 14000-14200 while above 13800. Nikkei has room to test 29000 and Shanghai can test 3550 and even 3600. Sensex and Nifty retain their bullish momentum and have potential to target 51000-51500 and 14800-15000 respectively in the coming days.

Dow (30687.48, +475.57, +1.57%)) has risen breaking above 30500. This has eased the danger of seeing a break below 30000 and a fall to 29000 immediately. While above 30500, Dow can revisit 31000 levels and can even extend the rise to 31500 as well. The expected correction is not happening again and is getting delayed further.

DAX (13835.16, +213.14, +1.56%) has risen and closed above 13800. While this break sustains, a further rise to 14000-14200 is possible in the near-term. It will also negate the chances of seeing a fall to 13200 that we had been expecting and it can happen after the above mentioned rise is seen.

Nikkei (28547.08, +184.91, +0.65%) has risen back above 28500. If it manages to sustain above 28500, a further rise to 28850-29000 is possible in the near-term and could delay the expected fall to 27000-26500. A strong rise past 29000 is needed to completely negate the bearish view of seeing a fall to 27000-26500. The price action in the coming days will need a close watch.

Shanghai (3524.45, −9.23, -0.26%) is holding higher above 3500 and keeps intact our view of testing 3550. As mentioned yesterday, it will have to be seen if Shanghai can break above 3550 or not. Such a break can take it up to 3600. We reiterate that 3450-3550 (narrow) or 3400-3600 (broad) can be a possible range that can be seen now. Within this while above 3400, the bias is bullish from a long-term perspective to see an upside break above 3600 eventually.

Sensex (49797.72, +1197.11, +2.46%) and Nifty (14647.85, +366.65, +2.57%) continued to surge and are retaining their bullish momentum. Nifty has risen past 14600 and can target 14800-15000. Sensex has broken above 49000 and can move further up to 51000-51500.

COMMODITIES

Crude prices trade higher and may continue to move up. Gold may trade within a sideways range for now but could be bullish for the coming weeks. Silver needs to sustain above 27 to keep the bullish momentum intact else a fall back to 25-26 cannot be negated. Copper also needs to remain above 3.50 to keep bullish view intact. Failure to hold above 3.50 may open up chances of a fall towards 3.45/40 in the near term.

Brent (57.69) and Nymex WTI (55.00) have risen as expected and could continue to rise towards 58-60 and 57 respectively. View is bullish for the near term.

Gold (1844.70) has dipped from levels seen yesterday and it would be important to see if it manages to rise above 1860-1880 in the near term or chooses to trade within 1880-1820 region for some more time. On the weekly charts, Gold looks bullish for a rise towards 1900-1940 over the next few weeks.

Silver (27.14) needs to sustain above 27 to maintain its bullish view and lead to a re-attempt of testing 29-30 on the upside. Failure to hold above 27 just now could make it vulnerable to a fall back towards 25-26 in the near term.

Copper (3.5230) has dipped from levels seen yesterday and a sustained break below 3.50, if seen could make it vulnerable for a fall towards 3.45/40 in the medium term. Only if Copper remains above 3.50, we may expect a sideways trade within 3.65-3.50 for the near term.

FOREX

Dollar Index needs to fall below 91 to take Euro higher else Euro could be vulnerable to a fall towards 1.19 in the near term. Aussie and Pound is likely to trade within a broad range for the near term. USDCNY and USDINR may also trade within the broad 6.40-6.50 and 72.75-73.15 region respectively.

Dollar Index (91.022) broke above 91 yesterday to make an intra-day high of 91.29 before coming off from there. If the index sustains above 91 to test 91.50 on the upside, Euro could fall further towards 1.19 in the near term. Watch price action near current levels.

Euro (1.2043) trades just near immediate trend support and needs to see a bounce today itself to avoid further falling from here towards 1.20-1.19. But failure to hold above the support at 1.2010 could initiate fresh bearish signal and open up chances of a fall to 1.19.

EURJPY (126.47) could test support at 126 before bouncing back towards 127.50 again in the near term. Overall range of 127.50-126 is likely to hold for some more time.

Dollar-Yen (105) has tested 105.17 o n the upside before falling off from there. Failure to fall below 105 just now could open up chances of a further rise towards 105.75. But if immediate resistance at 105.20 holds, a dip to 104.50 could be expected before the pair attempts to move up again in the medium term.

Aussie (0.7614) looks bearish while below resistance near 0.77. We may expect a test of 0.7550 before a bounce is seen again towards 0.7650-0.77.

Pound (1.3669) is likely to remain ranged within 1.38-1.36 in the near term.

USDCNY (6.4603) may test 6.45/44 in the near term but while above 6.40/42, we may expect an immediate range of 6.42-6.50 to hold for at least a couple of weeks.

USDINR (72.9650) was ranged within 73.05-72.92 yesterday holding well within our broad mentioned range of 73.15-72.75. We would keep an eye for a break on either side of the range to gove more clarity on further direction. A test of 72.75/80 looks likely on the downside.

INTEREST RATES

The US Treasury yields have moved up. The near-term outlook is bullish to see a test of their long-term resistances again in the coming days before reversing lower again. The German Yields have moved up and have room to rise further from here. Our earlier bearish view seems to be getting negated. The 10Yr GoI has surged further and keeps the bullish view intact.

The US 2Yr (0.11%) remains stable while the 5Yr (0.45%), 10Yr (1.11%) and 30Yr (1.88%) Treasury yields have moved up further. This keeps intact our view of seeing 1.20% (10Yr) and 1.95%-2% (30Yr) in the near-term. Thereafter we expect the yields to reverse lower again and keep the long-term downtrend intact.

The German 2Yr (-0.73%), 5Yr (-0.71%), 10Yr (-0.49%) and 30Yr (-0.05%) yields have moved up across tenors. The 10Yr has moved above 0.50% and while it sustains a further rise to -0.40% can be seen. The 30Yr on the other hand has room to test 0% and even 0.05% from here. Our earlier bearish view of seeing a fall to -0.60% (10Yr) and -0.20% (30Yr) seems to be getting negated.

The 10Yr GoI (6.1559%)has risen further sharply breaking above the next resistance at 6.1250% that we had mentioned yesterday. The bullish outlook is intact and a rise to 6.25%-6.28% can be seen in the coming days.