Dollar Index has fallen sharply and looks on the edge of breaking below 103 ahead of the US NFP and Unemployment data releases due today. We would wait to see price action near 102.50 which is a crucial weekly support to decide on further direction from here and would turn bearish only on a decisive break below 102.50. In line with this, we would keep an eye on whether the Pound would break above 1.28, Euro above 1.09, USDJPY below 146, USDINR below 82.90 and Aussie above 0.6640 respectively which would materialize only if the Dollar index breaks below 102.50. EURJPY has bounced well from 158 and looks bullish while USDCNY is stable. EURINR has risen well from 90 and needs to hold well to see further rise to 90.50 or higher.

Dollar Index (103.03) tested 103.81 yesterday before it fell towards the lower end of the 104-103 range mentioned in our earlier edition. Note that even if the index breaks below 103 it could be limited to weekly trend support near 102.50 from where a bounce back could be possible. Only a sustained break below 102, if seen would turn immediate view bearish for the medium term. Watch price action near 102.50-103 or the next few sessions. Some volatility is expected today as we have US NFP and unemployment data release.

EURUSD (1.0875) rose on Dollar weakness to current levels of 1.0875, contrary to our expectations of seeing a fall towards 1.0750 in the coming sessions. There seems to be a declining wedge/triangle pattern on the daily candle chart which if holds could be bullish above 1.09 in the near term. However, we would be cautious to see if Euro can decline back from 1.09 in case Dollar Index holds above 102.50. On the Euro charts, there is still some room towards 1.0750. We would wait and watch price action near 1.09 to take a clear stand on further direction from here.

EURJPY (159.16) tested 158.08 and bounced back well from there. While it holds above 158, it could rise to 160-161 again.

Dollar-Yen (146.33) has been declining along with the Dollar Index in line with our expectations. It could bounce from anywhere between 146-145 region next week to re-attempt a rise towards 148.

USDCNY (7.1786) continues to trade within a narrow region of 7.16-7.18. A decisive break past 7.18 will be needed to open upside chances of 7.20/22 or even 7.24 in the coming weeks. Else while below it, the pair could come down towards 7.16 or lower while the resistance holds.

Aussie (0.6596) has been rising well after a rise from 0.6508 over the last 2-sessions. It could continue to move up towards 0.66-0.6640 before it could decline back within the broad 0.6650-0.65 range.

Pound (1.2753) has risen sharply towards the upper end of its mentioned range of 1.2750-1.26. Sustained rise above 1.2750 could take it to 1.28 but whether it would break past 1.28 to move up or not is to be seen. We would be cautious to see price action near 1.28.

USDINR (82.97) fell to test 82.9225 yesterday post the Indian Union Budget. It would be crucial to see if the pair would sustain trade within 82.90-83.10 today or attempt to break lower which if seen could open chances of a further dip to 82.80/70.

EURINR (90.2209) held the support around 89.75 quite well and rose sharply from there. Note that there is crucial support near 89.50/75 on the pair on most time frames and the pair must bounce sharply from here to avoid bearishness in the medium term below 90-89.50.

The US Treasury and the German yields continue to fall as expected. Both the yields have room to fall further from here. The 10Yr and 5Yr GoI have declined sharply following the lower borrowing and fiscal deficit estimates announced in the Interim Budget yesterday. The 10Yr has broken below its support and is looking weak to fall more. But the 5Yr is poised in its support zone and needs to see if it is sustaining above this support or not.

The US 10Yr (3.88%) and the 30Yr (4.12%) yields are coming down as expected. As we have been mentioning, the fall to 3.8% (10Yr) and 4.1%-4% (30Yr) is happening in line with our expectation.

The German 10Yr (2.14%) and the 30Yr (2.37%) yields have dipped further. The bearish view is intact to see a fall to 2% (10Yr) and 2.2%-2.1% (30Yr) while below the 2.35% (10Yr) and 2.5%-2.6% (30Yr) resistances.

The 10Yr GoI (7.0583%) has declined sharply below 7.1%. While this break sustains, there is room to test 6.9% and even 6.8% on the downside.

The 5Yr GOI (6.9897%) on the other hand is poised in the 7%-6.95% support zone. If it manages to sustain above 6.95%, a bounce to 7.1% is possible. But a break below 6.95% can drag it down to 6.8%. It is a wait and watch situation now.

Dow Jones has risen back sharply to 38500. A sustained follow-through rise above 38550, if seen, can take it towards its crucial long term resistance from where a correction can be seen. DAX has dipped further but has support coming at 16700 which can lead to a bounce back in the next week. Nifty immediate outlook remains mixed. Nikkei has moved up towards its upper end of the range and break on the upside, if seen, can see a target of its key resistance which will negate our bearish our. Shanghai is threatening to break below the support at 2750 and fall further in the near term.

Dow (38519.84, +0.97%) has risen back sharply. Need to see if this sustains. A sustained follow-through rise above 38550 can take it up to 39000-39300. Thereafter a sharp correction is possible.

DAX (16859.04, -0.29%) is coming down as expected. Support is at 16700 and while that holds, it can bounce back to 17000-17200 again.

Nifty (21697.45, -0.13%) is still struggling to breach 21800 decisively. That keeps the 21400-21800 range (near-term) intact. The immediate outlook is mixed. As mentioned yesterday, 21000-22000 could be the broad trading range.

Nikkei (36347.50, +0.19%) has moved up towards the upper end of the 35500-36500 range. A break above 36500, if seen, can trigger a rise towards 37000. This could negate the chances of seeing a break below 35500 and fall towards 35000.

Shanghai (2867.57, -0.08%) sustains above 2750 but struggles to rise above 2800. This makes it vulnerable to a break below 2750 and fall towards 2700-2600.

Crude prices are coming down towards their immediate support. While they hold, a short corrective bounce is possible before resuming the fall. As mentioned yesterday, the support have held well for Gold and Silver. Natural Gas can remain in consolidative mode while above 2.0. Copper has declined towards 3.85 and has room to fall further in the near term.

Brent ($ 79.23) is heading down towards $ 78 as expected. While $ 78 holds, a bounce back towards $ 81-82 is possible before starting to fall towards $ 75-73.

WTI ($ 74.24) has fallen towards $ 74 in line with expectations. A further dip to $ 72 can be seen. While $ 72 holds, a bounce back towards $ 76 is possible before resuming the fall towards $ 70-68.

Gold (2071.50) remains in a narrow range of 2080-2040 as expected. While above 2040, there are chances of break above 2080 and rise towards 2100. A rise past 2100 (if seen) could become bullish for 2150.

Silver (23.22) tested 22.61 in line with our expectations for a test of 22.60-22.50 and has risen back sharply above 23.20. View remains bullish for a rise towards 23.50-24.00. There are chances of 25 also in the coming weeks.

Copper (3.8535) has declined towards 3.85 as the resistance at 3.95 is holding well. A further dip towards 3.83-3.80 is possible from here.

Natural Gas (2.0620) rose to 2.1680 yesterday but couldn’t sustain the rise and come down below 2.10. It can consolidate between 2.0-2.2 range. As long as it holds above 2.0, a rise towards 2.3-2.5 is still possible.

1:30 07:00 AU PPI
Expn – …Expected 1.9% …Previous 1.8%

13:30 19:00 US NFP
Expn 231K …Expected 187K …Previous 216K

13:30 19:00 US Unemployment Rate
Expn 3.6% …Expected 3.8% …Previous 3.7%

13:30 19:00 US Avg Hrly Earnings
Expn 0.3 …Expected 0.3 …Previous 0.4

13:30 19:00 US Average Hourly Earnings Production & Non Supervisory Employees
Expn 0.2 …Expected – …Previous 0.4

DATA YESTERDAY
—————
0:30 06:00 JP PMI
Expn 47.6 …Expected – …Previous 47.9 …Actual 48.0

1:45 07:15 CN PMI
Expn – …Expected – …Previous 50.8 …Actual 50.8

5:00 10:30 IN Manufacturing PMI
Expn 54.9 …Expected – …Previous 54.9 …Actual 56.5

8:30 14:00 CH PMI
Expn 42.5 …Expected – …Previous 43.0 …Actual 43.1

9:00 14:30 EU PMI
Expn – …Expected – …Previous 44.4 …Actual 46.6

9:30 15:00 UK PMI
Expn 45.8 …Expected – …Previous 46.2 …Actual 47.0

10:00 15:30 EU Unemp
Expn 6.5% …Expected – …Previous 6.4% …Actual 6.4%

12:00 17:30 BOE Mtg
Expn – …Expected – …Previous 5.3% …Actual 5.25%

12:00 17:30 UK BOE Minutes
Expn – …Expected- …Previous 3-0-6 …Actual 2-1-6

14:30 20:00 CA PMI
Expn – …Expected – …Previous 45.4 …Actual 48.3

15:00 20:30 US Manufacturing ISM
Expn 46.9 …Expected – …Previous 47.4 …Actual 49.1