Market Morning Briefing: Euro Came Off After Testing A High Near 1.155

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Dow (26447.05, -0.68%) could get some support near 26250-26200 levels from where a bounce back towards 26750 is possible. Weekly resistance near 27000 is holding for now. But this resistance will have to break on the upside to bring in more bullish momentum to push the index higher in the longer run. Else while 27000 holds, there could be a corrective dip towards 26200-26000 in the near term.

Dax (12111.90, -1.08%) closed stable in the last session. 12000-12100 levels could produce a bounce back towards 12300-12400 levels. On a larger picture, the weekly chart suggests some narrowing trade within 12000-12600 region in the coming weeks.

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Nikkei (23783.72, -0.80%) is trading lower for now. A fall towards 23400 looks possible in the near term before a bounce back is seen towards 24000-24200 levels again.

The People’s Bank of China announced yesterday that it would cut its RRR by 1% point for commercial banks, joint stock commercial banks, city commercial banks, overseas invested banks as well as non-country rural commercial banks starting 15th October. Shanghai (2751.22, -2.52%) which was trading above 2800 before the holiday week has now fallen below 2800 and is trading at 2751 also as an impact of the overall fall in the global equities while China was on holiday last week. While above 2700, there is some chance that the index could bounce back towards 2800-2850 in the medium term, else a break below 2700, if seen could be bearish for the week.

Nifty (10316.45, -2.67%) could see some recovery today. But overall the index looks bearish towards 10000 while below 10500.

COMMODITIES

Brent (83.28) and WTI (73.71) have come down a bit as expected.

WTI faces immediate near term support at current levels and if that holds, it could rise towards 75 again in the next few sessions. Crucial resistance is seen near $77 and $80 on the upside.

Brent could also be limited to $90 on the upside but is currently in a short term correction from levels near 86. While the fall sustains, there is room towards 82 which is a short term support and could produce a decent bounce back towards 85-86 levels.

While there is a possibility of seeing one last leg of a rise towards respective resistances on Brent and WTI near $90 and $80, if the crude prices see a sharp fall below 80 and 70 (Brent and WTI), we could consider a top already in place and revisit our view of an upmove in the medium term.

Gold (1199.80) is ranged near 1200 and is likely to remain ranged in the 1190-1220 region for the near term. The sideways consolidation could continue for another 1-2 weeks before a sharp break on either side is seen.

Copper (2.7535) looks bearish just now. Although there is support at 2.75, there could be chances of testing 2.70 on the downside from where a bounce could be expected.

FOREX

News of liquidity injection in the Chinese economy has weakened the Yuan. This could further lead to a rise in Dollar Rupee – watch if resistance near 74.50 holds or not.

Dollar Index (95.70) still looks bullish towards crucial resistance near 96.5 which it could test in this week / by next week. Expect a quiet day of trading today since its a holiday in USA.

Euro (1.1514) came off after testing a high near 1.155 on Friday. While below 1.155, it still looks bearish towards support near 1.14. Lower down, it could even target the 200 weeks MA near 1.132 after that in the weeks ahead.

Dollar Yen (113.87) tested support near 113.5 on daily candles on Friday and again moved up from there. While above 113.5, it could go on to test 115 in the next 1-2 weeks. A break below 113.5 on the other hand could be bearish. Japanese markets are closed today – expect a quiet day for the Yen today.

Euro-Yen (131.18) is almost breaking below support on daily candles. While below 131.20-25, it can move lower towards 130.0-129.5 in this week.

Pound (1.3118) has immediate resistance near 1.3125-1.3150 which should hold and lead to a downmove towards 1.29 in this week.

Aussie (0.7052) could move lower towards channel support on daily candles near 0.70 in this week.

Dollar Yuan (6.8987): News that the Chinese government has injected massive new liquidity into the economy has weakened the Yuan. It now has resistance in the 6.92-6.94 zone, which if broken, could be very bearish for the Yuan.

Dollar Rupee (73.77): A correction from 74.225-74.50 is likely. However, weakness in the Chinese Yuan and bearishness in Indian equities could weaken the Rupee even beyond 74.5.

INTEREST RATES

On Friday, data on US NFP and average hourly wages both showed lesser growth as compared to the previous month . However, against expectations, the unemployment rate fell to a 48 years low of 3.7% – this figure might have kept US yields elevated.

The US 10 Year (3.23%) and 30 year (3.40%) have important resistances at 3.25% and 3.40% respectively, which could make these yields come off in the near term.

The 10 Year German-US spread (-2.66%) might have some support on medium term chart near current levels – however, on long term chart, a downmove towards -2.80% still looks possible over the next few weeks.

The German 10 year yield (0.57%) is testing resistance on medium term chart near current levels – it could come off towards 0.50%-0.40% again from here. However, if it breaks above this resistance, the next target could be 0.75% (as seen on long term chart).

Japan 10 year yield (0.15%) rose above 0.14% last week and could now target levels near 0.20%-0.25% in the next 2-3 weeks.
 
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