DXY index trading near 3-year high levels at 84.63 - ICICI Bank : Treasury Research

DXY: The DXY index is trading in the vicinity of 3-year high levels at 84.63 currently as against previous close of 84.52. The Dollar remains supported as the good start to the Q2 earnings season reflects US economic strength and fuels expectations of an early QE tapering by the Fed. Moreover, the safe haven demand for the greenback has been supported by the reduction in global growth forecasts by the IMF yesterday for 2013 and 2014. The investors await the FOMC minutes due today. Technically, intraday trend for the DXY is bullish with support and resistance at 84.20 and 84.90 respectively.

EUR/USD: Euro is trading weak at 1.2778 levels after losing 0.69% in the previous trading session on ECB official Asmussen's comments that the forward guidance for low rates stretches for more than 12 months. Moreover, the S&P downgrade of the Italian sovereign credit ratting by one notch to BBB with a negative outlook has weighed on the currency. The intraday trend for the Euro is bearish, with support and resistance at 1.2750 and 1.2800 respectively.

GBP/USD: The Sterling is trading weak at 1.4868 levels after losing 0.56% in the previous trading session, on weaker than expected UK retail sales, trade balance and manufacturing output releases yesterday. This has led to speculation that the BoE will adopt a very accommodative policy stance in the coming months thereby weighing on the currency. The intra day trend for the GBP/USD cross is bearish, with support and resistance at 1.4812 and 1.4882 respectively.

USD/JPY: The Japanese Yen is trading at 100.96 levels after losing 0.20% in the previous trading session. While the greenback strength is weighing on the currency, the losses have been limited by the flat trading witnessed in the US treasuries. Markets would watch for the Japan consumer confidence data and the BoJ policy outcome with the 2-day meeting starting today. Technically, the intra day trend for USD/JPY cross is bullish with support at 100.70 and resistance at 101.30.

USD/CHF: The Swiss Franc continues to trade weak against the Dollar amidst strength in the greenback and has lost ground against the Euro as well and EURCHF is at 1.2436 levels currently as against yesterday's close of 1.2426. On the domestic front, retail sales data for the month of May came in at 1.8% YoY, which was weaker than the previous print of 3.1% YoY. Price pressures on an annual basis still remains negative in the economy although the quarterly output is showing signs of improvement. In the near term the CHF will take cues from Euro movements. Technically, USD/CHF is expected to trade bullish with support at 0.9700 and resistance at 0.9762.

AUD/USD: The Australian Dollar is trading lower around 0.9144 levels as against previous close of 0.9176 as sharp decline in Westpac consumer confidence index in July added to domestic growth concerns. Slowdown in China's imports in June also raised worries over the outlook of Australian exports and further weighed on the Aussie. The currency also remained under pressure amidst Dollar strength and decline in metal prices this morning. Technically, we expect AUD/USD to bearish with support at 0.9125 and resistance at 0.9184.

USD/CAD: The Canadian Dollar is trading little changed this morning around 1.0530 levels as markets await the FOMC minutes due later in the day for cues on the QE tapering by the US economy, Canada's largest trading partner. Meanwhile, a better than expected reading of Canada's housing starts, coming in at 199.6K in June aided domestic growth optimism and supported the currency. However, the upside was capped amidst Dollar strength and decline in crude oil prices in the early trade today. Technically, we expect USD/CAD to trade bullish with support at 1.0495 and resistance at 1.0560.

Source : Equity Bulls

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