FED policy meeting is important today where markets do not expect a rate hike but is keen to see the quarterly updates on inflation, interest rates, growth and employment figures. Dollar Index could trade within the broad 104.50-105.50/106 region while Euro can bounce from 1.0650/1.06 to rise towards 1.0750. Aussie and Pound look stable and could trade within the 0.64-0.65 and 1.23-1.24 region for the near term. USDJPY can rise to 148-149 while EURJPY can rise while above 157. USDCNY can test 7.30/35. USDRUB can trade within 95-99 range. EURINR trades above 88.50 and could remain within 88/88.50-89.50 for the near term. USDINR can face rejection from 83.30 and fall back to 83.10-83.00. Failure to fall from 83.30 could trigger further rally towards 83.50 but that looks less likely for the day.

Dollar Index (105.15) is likely to trade within 104.50-105.50 for the very near term. Also note 106 is a crucial near term resistance.

EURUSD (1.0681) may hold above 1.0650 to rise back towards 1.0750 in the coming sessions. Failure to hold above 1.0650 can extend the downside to 1.06 which is an important near term support.

EURJPY (157.90) looks bullish above 157 for a slow rise to 159.

Dollar-Yen (147.83) is holding above 147 and can rise slowly towards 148-149. A confirmed break above 148 will turn bullish for the medium term.

USDCNY (7.2973) is again headed higher and can rise to 7.32/35 again in the near term with higher target of 7.38/40 eventually.

Aussie (0.6452) has scope to rise towards 0.65 with downside chances of 0.64 intact. Broader range of 0.6350-0.65 continues to hold for now.

Pound (1.2388) is stable above 1.2370, not breaking lower and unable to move up sharply. View is bearish towards 1.23 while below 1.24.

USDRUB (97.4924) has been holding well above 95 and can rise towards 98-98.70 in the next few sessions.

USDINR (86.2725) rose sharply on Monday to rise to our expected upside level of 83.30 which is an important and immediate resistance. If the pair holds below 83.30, we may look for a decline back towards 83.10-83.00. Else the spot must sustain above 83.30 to rise further towards 83.50. We would wait and watch.

EURINR (88.9687) can trade below resistance at 89.50 with downside limited to 88.50-88.00 for the near term.

The US Treasury yields remain higher and have room to rise further. The US Federal Reserve meeting outcome is due tonight which can determine whether the current upmove can continue or will run into a correction before the broader uptrend resumes. The German yields continue to surge and are keeping our bullish view intact. The 10Yr and 5Yr GoI has come down failing to break their intermediate resistance. But support is there to limit the downside and keep intact the broader bullish outlook.

The US 10Yr (4.36%) and the 30Yr (4.43%) yields remain higher and keeps intact our view of seeing 4.4% (10Yr) and 4.4%-4.5% (30Yr) first and then 4.5%-4.6% (10Yr) and 4.6%-4.7% (30Yr) possibly after a correction. Support is at 4.2% (10Yr) and 4.3% (30Yr).

The German 10Yr (2.73%) and the 30Yr (2.86%) yields have surged further. Bullish view is intact to see 3%-3.1% on the upside. Support is 2.5% (10Yr) and 2.6% (30Yr).

The 10Yr GoI (7.1914%) and the 5Yr GOI (7.1688%) have come down. Intermediate resistance at 7.2% is holding well on both. But while above 7.1%, the bias is bullish to break 7.2% and rise to 7.25% first and then to 7.35% (10Yr) and 7.3% and 7.45% (5Yr) eventually.

Dow Jones and Nikkei have to hold above their support at 34300-34200 and 33000, respectively to avoid the danger of falling further. DAX retains its 15500-16100 range and is coming down with it. Nifty has come down but can get support at 20000. Shanghai remains ranged within 3150-3100.

Dow (34517.73, -0.31%) closed lower but has risen very well from the day’s low of 34311. Supports are at 34300-34200 which will have to hold to keep the Dow in a range of 34200-35000 and avoid a fall to 34000-33800. It is a wait and watch situation.

DAX (15664.48, -0.40%) retains its 15500-16100 range and is coming down with it. We will have to wait for a range breakout to get clarity on the next move.

Nifty (20133.30, -0.29%) has support at 20000 while above which the chances of testing 20300-20400 is still there. It will come under pressure only on a break below 20000 in which case 19800-19750 can be seen.

Nikkei (33116.50, -0.44%) has fallen back below 33250 and is approaching 33000. It has to hold above 33000 to keep alive the chances of seeing a rise towards 34000-35000. Else it can fall further towards 32500.

Shanghai (3112.40, -0.4%) remains ranged within 3100-3150. A decisive break below 3100, if seen, can lead to a fall towards 3075/3050.

Brent and WTI tested the resistance as expected and have come down. Crude outlook is bearish for the near term. Gold, Silver and Copper are trading lower and may test their immediate support. Natural gas will remain bullish as long as it holds above 2.60-2.50. The FOMC meeting tonight would be crucial to watch as it could set the tone of the market.

Brent ($ 93.63) rose sharply to test $ 95.95 yesterday and has fallen back from there to trade below $ 94. While below $ 96-95, view is bearish to see a fall towards $ 93-91-90.

WTI ($ 89.75) tested $ 92.43 yesterday in line with expectations and has come down from there. A fall towards $ 88-86 is possible while it remains below $ 92-93.

Gold (1951) tested 1958.90 yesterday and has turned down from there. Resistance is at 1965-1970. While it remains blow 1965, a dip towards 1940-1932 might be possible. A strong break above 1965-1970 is needed to strengthen the momentum towards 1980-2000.

Silver (23.40) tested a high of 23.71 yesterday and has dipped from there. Immediate support is at 23-22.80. While that holds, the chances are high for a rise towards 24 or higher.

Copper (3.7590) is inching down but can get support from 3.70. If 3.70 holds, we can expect a range of 3.70-3.85/90 to hold for some time.

Natural Gas (2.7360) is getting support at 2.6. While above the support at 2.60-2.50, bias is positive for a rise towards 3.0. Overall a range of 3.0-2.5 could persist over the medium term.

6:00 11:30 UK CPI Y/Y
Expn 7.6% …Expected 7.1% …Previous 6.9%

18:00 23:30 US FOMC Meeting
Expn – …Expected 5.50% …Previous 5.50%

DATA Yesterday:
————-
9:00 14:30 EU CPI (YoY)
Expn 5.3% …Expected 5.3% …Previous 5.3% …Actual 5.2

12:30 18:00 US Housing Starts
Expn 1531K …Expected 1440K …Previous 1447K …Actual 1283K

12:30 18:00 CA Inflation Y/Y
Expn 3.9% …Expected 3.8% …Previous 3.3% …Actual 4.0%