Published on 18/07/2019 3:22:33 PM | Source: Yes Securities Ltd

EURINR pair has taken support at the cluster of previous resistance - Yes Sec

Posted in Currency Report| #Currency Tips #Yes Securities Ltd

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Euro has remained under pressure during July, thanks to deteriorating macro outlook. Eurozone seems to be slowing at a much faster clip, with weakening German growth been the most prominent feature of the regional slump. European Commission projects German GDP to grow only 0.5% this year, while the German government expects hardly any growth this year and is looking for a 1.5% advance for next year. Eurozone industrial output is declining persistently, while manufacturing PMI's have been in contraction for four consecutive months. On the trade side, overall Eurozone exports in April have witnessed the slowest pace in years. Based on the recent flow of numbers, European Commission projects Euro zone GDP to grow 1.2% this year and 1.5% in 2020, well below the 1.9% growth in 2018. 

Given the weakness in European growth, coupled with the fact that inflation is well below target, the central bank remains open to the prospect of more support for the struggling Euro economy if the slowdown persists. ECB chief at the recent policy meeting stated that rate cuts or new asset purchases are now a possibility. It seems softness in the economy might last longer than expected and accordingly ECB officials have reiterated their willingness to use all tools to aid the economy. Inflation readings certainly provide plenty of room to remain dovish as underlying prices (excluding food and energy) are now rising at their weakest rate in about a year. Market participants will keep an eye on the forthcoming ECB meeting, with investors expecting further easing given the negative yields that are evident across swath of the European sovereign debt market. All in all, we see Euro confined in a narrow range at the bottom following the recent fall against the greenback. 


* EURINR pair has taken support at the cluster of previous resistance which is now acting as demand zone, placed between 77.10-77.30.

* Further, the pair is trading above the high of previous week’s hammer candlestick pattern, suggesting an attempt to create a shortterm bottom.

* A positive divergence with respect to RSI is also visible which portends to a short covering rally in the coming trading sessions.

* Buy EURINR July Fut @ 77.45-77.55 SL 77 TGT 79.55 CMP 77.52


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