DXY index is trading strong at 83.55 levels - ICICI Bank : Treasury Research

The DXY index is trading strong at 83.55 levels after gaining 0.59% in yesterday's trading session. The US durable goods orders, factory orders and vehicle sales prints came out better than market expectations and further fuelled speculation that the Fed might resort towards early tapering of the QE program. Weak services PMI data from China also aided the safe haven demand for the Dollar. Meanwhile, comments from Fed official Dudley were mixed. Though Dudley stressed on the prospects of an improvement in US economic growth in 2014, he also added that the Fed might consider increasing the pace of monthly asset purchases if the economic recovery deteriorates sharply. The markets now eagerly await the US ADP employment, initial jobless claims, ISM non-manufacturing PMI release due later today. The market volumes though are likely to be limited ahead of the US Independence Day Holiday tomorrow. Technically, intraday trend for the DXY is bullish with support and resistance at 83.35 and 83.95 respectively.

The Euro is trading below the psychological 1.30 mark at 1.2970 levels after losing 0.65% in the previous trading session, amidst broad Dollar strength. The currency has also come under pressure on re-emergence of political concerns, with the resignation of the Foreign Minister in Portugal. The markets remains focused on the ECB policy meeting due tomorrow, with Draghi likely to assert an accommodative policy stance in the ailing economy. The investors would also track the Eurozone retail sale sand services PMI due later today. The intraday trend for the Euro is bearish, with support and resistance at 1.2935 and 1.3000 respectively.

The British Pound is trading at 1.5150 levels after losing 0.40% in the previous trading session tracking losses in the Euro. The currency moves though are likely to be limited ahead of the BoE policy meeting due later this week, the first under the new Governor Carney, with his monetary policy stance to be closely watched. The investors would also track the UK services PMI release due later today. The intra day trend for the GBP/USD cross is bearish, with support and resistance at 1.5097 and 1.5193 respectively.

The USDJPY currency pair is trading above the psychological 100 mark at 100.54 levels on broad Dollar strength. After hitting a high of 93.78 in mid-June, the currency has been consistently under pressure amidst Dollar strength and BoJ's ultra accommodative policy stance. Technically, the intra day trend for USD/JPY cross is bullish with support at 100.00 and resistance at 101.00.

USD/CHF is currently trading at 0.9509 levels after gaining 0.56% in the previous trading session amidst Fed QE tapering concerns. Meanwhile, the EURCHF cross is trading around 1.2332, after hitting highs of 1.2382 yesterday amidst losses in the Euro. In terms of data releases the markets will track the Swiss CPI print due on Friday. Technically, USD/CHF is expected to trade bullish with support at 0.9485 and resistance at 0.9542.

The Australian Dollar is trading marginally higher around 0.9152 levels as against previous close of 0.9147 as more than expected rise in Australia's May trade surplus coupled with a positive retail sales reading aided growth optimism. However, the upside remains capped amidst broad based strength in the Dollar and decline in metal prices overnight. Meanwhile, the currency has witnessed sharp losses yesterday falling from over 0.92 levels to an intraday low of 0.9153 as the RBA said that the Aussie is likely to weaken further, which would foster growth rebalancing in the country. The Central Bank however, maintained the policy rate at historic low of 2.75%. Technically, we expect AUD/USD to bearish with support at 0.9133 and resistance at 0.9188.

The Canadian Dollar is trading slightly strong at 1.0538 compared to yesterday's close of 1.0544 tracking sharp gain in crude oil prices. However, significant strength in the Dollar capped the upside. Markets would closely watch a series of labour market data prints from US, Canada's largest trading partner due this week for further cues on the economy's growth momentum. Technically, we expect USD/CAD to trade bullish with support at 1.0495 and resistance at 1.0550.

Source : Equity Bulls

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