Sharp rally in the Dollar Index post comments from the FED Board Governor Christopher Waller that the US is within “striking distance” of the 2% inflation target and that the FED should not rush towards rate cuts until it is clear that lower inflation would sustain. Markets are now pricing a 66.9% chance of a 25bps rate cut in March-24 from 81% earlier according to CME’s FED Watch Tool. The Dollar Index could rise towards 104 if it sustains above 103. Euro is bearish to 1.08 while below 1.09. EURJPY and USDJPY are bullish but could face slight rejection from 160.55-160.70 and 148 respectively. Contrary to expectations, USDCNY has risen above 7.18 and could now head towards 7.20/22. Aussie has fallen below 0.66 and now looks bearish towards 0.65/64. Pound may rise from 1.26. USDRUB has recovered after a fall to 86.6350. Immediate downside is likely to be limited to 86. EURINR can test and bounce from 90 initially. USDINR could rise initially to 83.10/20 from where rejection is possible back towards 83-82.90/80.

Dollar Index (103.349) has rallied past 103 after the expectations for the March rate cut reduced post comments from the FED Board Governor Christopher Waller. Sustained rise above 103 is bullish towards 104.

EURUSD (1.0875) indeed fell below 1.09 as mentioned yesterday and tested 1.0860. A fall towards 1.08 could be possible in the near term before a bounce is seen. Immediate view is bearish to 1.08.

EURJPY (160.14) has risen above 160 but has immediate resistance near 160.55/160.70 which if holds could push the pair back towards 159/158. Watch price action to see if it manages to sustain above 160 for long.

Dollar-Yen (147.25) has moved up well in line with the Dollar strength breaking above our expected 147 mentioned in yesterday’s edition. Sustained rise from here could take it towards 148 before a pause is seen.

USDCNY (7.1928) rose sharply on Dollar strength, breaking above our expected upper level of 7.18 contrary to our expectation of seeing a fall within 7.18-7.12. Continued rise from here can take it to 7.20/22.

Aussie (0.6656) fell as expected but much below our mentioned 0.66. It has been falling for the third consecutive week now and could head towards 0.65/0.64 if an immediate rise from here is not seen. View for the very near term is bearish.

Pound (1.2634) too fell sharply below 1.27. It could attempt to rise back from 1.26 else could be vulnerable to fall towards 1.25/24 in the medium term. Watch price cation near 1.26.

USDRUB (88.0995) tested 86.6350 before moving up. Immediate downside looks limited to 86 in the near term.

USDINR (83.0750) has not been able to sustain below 82.80 and the earlier expected rise has happened. At the same time there is resistance near 83.10/20 region which needs to break for the pair to rise higher else can keep the pair ranged within 83.20-82.80 for a while. USDINR could be expected to rise today given the weakness in major currencies on a stronger US Dollar.

EURINR (90.3553) could hold above 90 in the near term for a short corrective rise before falling sharply towards 89.50 or lower.

The US Treasury yields have bounced back. Need to see if they sustain higher and get a strong follow-through rise to negate the chances of falling back again. The US Retail Sales data release today will be important to watch. The German yields have bounced back and are keeping intact our bullish view. There is room to rise more from here before a reversal happens. The 10Yr and 5Yr GoI have declined below their intermediate supports. That keeps our bearish view intact. More fall can be seen in the coming days.

The US 10Yr (4%) and the 30Yr (4.23%) yields have bounced. A follow-through rise is needed to move up towards 4.1%-4.2% (10Yr) and 4.3%-4.4% (30Yr). Else a break below 3.9% (10Yr) and 4.1% (30Yr) and a fall to 3.8% (10Yr), 4% (30Yr) will still be possible.

The German 10Yr (2.23%) and the 30Yr (2.43%) yields have risen back again. The bullish view is intact to see 2.35% (10Yr) and 2.5%-2.6% (30Yr) on the upside. After that a reversal can be seen.

The 10Yr GoI (7.1459%) has declined below 7.16%. The expected fall to 7.1% can happen now.

The 5Yr GOI (7.0336%) has broken below 7.05% and can now fall to 7%-6.95%. Thereafter the yield can rise back again.

Dow Jones has come down sharply and can see a test of its crucial support in the near term. DAX has come down towards the lower end of the range. A break lower can see an extended fall in the coming sessions. Nifty has dipped slightly but a rise towards its immediate resistance is still possible from where a profit taking can be seen. Nikkei can fall while it remains below 36000. Shanghai remains stuck within 2850/2865-2905. A break on either side of the range will decide its next move.

Dow (37361.12, -0.62%) has come down sharply and can test 37000 – a crucial support. A break below it can drag it to 36500 after which a rise is possible again.

DAX (16571.68, -0.30%) is near the lower end of its 16500-17000 region. A sustained break below 16500 can drag it down to 16000-15800.

Nifty (22032.30, -0.29%) has dipped slightly. Though a rise to 22400-22500 is still possible, we may have to remain cautious for a reversal anytime. Whether that reversal happens from 22400-22500 itself or slightly higher will have to be seen.

Nikkei (35850, +0.65%) rose to a high of 36245 before coming off from there. Only a sustained break above 36000 can see a rally towards 37000. Else the chances of seeing a fall towards 35000-34500 cannot be negated.

Shanghai (2868.60, -0.88%) remains stuck within 2850/2865-2905 range. A break on either side of the range will decide if it will rise towards 2940-2950 or falls towards 2800.

Brent remains mixed and range bound whereas WTI has dipped below $ 72 but is likely to get support at $ 70-68. Gold and Silver have declined as the resistance mentioned at 2060 and 23.50/23.80 has held well and have room to come down further from here. Copper and Natural Gas looks vulnerable towards 3.70 and 2.60-2.55 respectively.

Brent ($ 77.84) remains mixed. It can remain ranged within $ 82-76/75 for some time before moving up towards $ 85.

WTI ($ 71.90) has declined below $ 72. The support at $ 70-68 is expected to hold and keep the WTI in a range of $ 68/70-76 for some more time before an eventual break above $ 76 and rise towards $ 78-80 is seen.

Gold (2032.90) has declined below 2040 as the resistance at 2060 has held well. It can fall further towards 2020-2000.

Silver (23.07) is holding well below the resistance at 23.50-23.80. Outlook is bearish for a break below 23 and fall towards 22-21.80. Thereafter a bounce back can be seen.

Copper (3.76) is trading below 3.80 and while below 3.80/3.83, there is scope for a to fall towards 3.70.

Natural Gas (2.8070) has declined sharply breaking below the lower end of the 3.40-2.90 range. A fall towards 2.60-2.55 looks likely before a bounce back can happen.

7:00 12:30 UK CPI Y/Y
Expn 4.0% …Expected – …Previous 3.9%

10:00 15:30 EU CPI (YoY)
Expn 2.6% …Expected – …Previous 2.4%

13:30 19:00 US Retail Sales (MoM)
Expn -0.5% …Expected – …Previous 0.1%

14:15 19:45 US Industrial Production
Expn -0.6% …Expected – …Previous 0.3%

14:15 19:45 US Capacity Utilization
Expn 78.3% …Expected – …Previous 78.8%

DATA YESTERDAY
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7:00 12:30 UK Unemp
Expn 4.2% …Expected 4.2% …Previous 4.2% …Actual 4.2%