The Dollar Index rose sharply to head towards resistance at 105 post US CPI release of 3.11% (Y/Y), lower than the revised Dec-23 figure of 3.32%. Meanwhile, Euro could soon test support at 1.07 before rising back. EURJPY and USDJPY look bullish to 162 and 151-152 respectively if the current rise must sustain. Aussie broke below the expected range of 0.6550-0.6470 and could test 0.64 before possibly rising back. Pound has broken below the lower end of its broad range of 1.28-1.26 range and could now be seen trading within a revised range of 1.25-1.27. EURINR is bearish to 89-88 in the near term while below 90. USDINR continues to trade within 83.05-82.90/80 but could have some scope to rise towards 83.10/15 on global currency movements seen overnight.

Dollar Index (104.868) has risen sharply past 104.60 after the US CPI release at 3.11% (YoY), higher than market expectations of 2.90% but slightly lower than the Dec-23 figure of 3.32%. It could now test crucial resistance at 105 from where a sharp reversal towards 103 or lower is expected in the medium term.

EURUSD (1.0706) has been declining in line with our expectations to test 1.07 which needs to hold to produce a sharp bounce back towards 1.08-1.0850 or higher. Failure to hold above 1.07 would prove our view wrong and could be vulnerable to strong bearishness.

Contrary to seeing a fall towards the support of 160-159, EURJPY (161.21) has risen sharply above 161 and could now see an extended rise to 162 before possibly topping out.

Dollar-Yen (150.56) has surprisingly risen above our expected level of 150 but if it fails to come off immediately from here, it could head towards 151-152 before dipping back towards 149 or lower in the medium term.

USDCNY (7.1924) is closed this week. Trading will resume from next week.

Aussie (0.6453) broke below the lower end of the 0.6550-0.6480 range mentioned yesterday. Note that 0.64 is an immediate support which needs to hold to produce a medium-term bounce back towards 0.6550 or higher. Failure to hold above 0.64, could be vulnerable to a sharp decline towards 0.63/62. Watch price action near 0.64 for a rise.

Pound (1.2598) fell sharply from 1.2683 and has broken below the 1.28-1.26 range we have been looking at. A dip to 1.25 can be seen before rising back towards 1.26/27. Revised range of 1.25-1.27 can hold for the near term.

USDINR (83.0075) remained stable around 83.00 yesterday. But with the overnight rise in the Dollar Index and fall in Euro, there is scope for USDINR to head towards 83.10/15 on the upside before falling back in the coming sessions towards 82.90/80 again.

EURINR (89.0252) has been gradually coming down and could soon test our mentioned targets of 89/88 while below 90. Immediate range of 90-89/88 may hold.

The US Treasury yields have surged after the inflation data release yesterday. If this rise sustains then the yields can move further up from here. That will prove our view of seeing a reversal wrong. The US CPI and Core CPI increased on a month-on-month basis. Though the YoY (%) continues to come down it came in much higher than the market expectation. The US CPI (YoY) dipped to 3.11% in January from 3.32% in December. But the number was higher than the market expectation of 2.9%. The German yields are also sustaining higher. A further rise from here can take them up in the coming days and the expected reversal may not happen. We will have to wait and watch. The 10Yr GoI remains stable and keeps alive the chances of rising from here before resuming the downtrend. The 5Yr GoI is inching up in line with our expectation.

The US 10Yr (4.32%) and the 30Yr (4.47%) yields have surged beyond the 4.2% and 4.4% resistances respectively. While this break sustains, our view of seeing a reversal will go wrong. A further rise to 4.45%-4.5% (10Yr) and 4.6%-4.65% (30Yr) is possible then.

The German 10Yr (2.39%) has inched up while the 30Yr (2.55%) yield remains stable. While above 2.35%, the 10Yr can rise to 2.5% and higher. The 30Yr can rise to 2.7%-2.8% on a break above 2.6%. That will prove our view of seeing a reversal wrong. It is a wait and watch situation now.

The 10Yr GoI (7.0998%) remains stable. It keeps alive the chances of a rise to 7.15%-7.18% before resuming the downtrend targeting 6.9%-6.8% on the downside.

The 5Yr GOI (7.0738%) is inching up towards 7.1% as expected. The price action thereafter will need a close watch to see if the yield is extending the rise or falling back again.

Dow Jones, DAX and Nikkei have fallen sharply after the disappointing US CPI data. Nifty has recovered on Tuesday but could fall back or even break below its immediate support as it could face resistance overhead and also due to the weakness in global equities.

Dow (38272.75, -1.35%) has declined sharply below 38500. Key support is at 38100-38000. A break below it can drag the Dow down to 37300-37000. That in turn will negate our view of seeing 39000-39300 on the upside.

DAX (16880.83, -0.92%) has come down sharply into the 16800-17000 range again. A break below 16800 will be bearish to see 16500 first and then even lower levels going forward. That will also reduce the chances of the rise to 17500 that we have been expecting. It is a wait and watch situation now.

Nifty (21743.25, +0.59% is holding above 21500. But while below 21850, the bias is negative to break 21500 and fall to 21000 and even lower. For now, 21500-21850 is the trading range.

Nikkei (37602.50, -0.95%) indeed tested 38000 and has come down a bit from there as expected. While below 38000, a fall towards 37000-36500 is possible.

Shanghai (2865.90) is closed for this week.

Crude prices are heading towards their key resistance as expected which are likely to hold and lead to a fall back from there. Higher than expected US CPI figure have led to a sharp fall in Gold and Silver towards their key support at 2000 and 22 respectively. A break below these support levels, if seen, can lead to a deeper fall for the precious metals. Copper too has fallen back sharply and may come down towards 3.65-3.60 before a bounce back is possible. Natural Gas continues to dip and has scope to test its crucial support in the near term from where a bounce back is expected to happen.

Brent ($ 82.40) has moved up above $ 82. A test of $ 84-85 looks possible in the near term. Thereafter a fall can be seen towards $ 80 or maybe lower.

WTI ($ 77.59) has risen well above $ 77 as expected. A test of $ 80 can be seen. After that, a fall back towards $ 76-74 is possible.

Gold (2005.10) has fallen sharply towards the support at 2000. Resistance is seen at 2020 and then at 2040. Failure to sustain above 2000 and rise past 2020-2040 could make it vulnerable for a fall towards 1950.

Silver (22.10) has fallen back sharply towards 22 after testing a high of 23.05 on Tuesday. If 22 holds, we may see a sideways consolidation within 22-23.50 for some time. Else can fall further to 21.

Copper (3.70) has come down sharply from a high of 3.7545. It may fall to 3.65-3.60 first and then a bounce back can be seen towards 3.80. Hence, our expected rise towards 3.80 mentioned yesterday is delayed for now.

Natural Gas (1.6820) has fallen below 1.70. A test of 1.5 looks likely before a bounce back can happen towards 2.0-2.1.

6:30 12:00 IN WPI
Expn 0.53% …Expected 0.53% …Previous 0.73%

7:00 12:30 UK CPI Y/Y
Expn – …Expected 4.1% …Previous 3.9%

10:00 15:30 EU GDP
Expn – …Expected 0.0% …Previous 0.0%

10:00 15:30 EU Ind Prodn (MoM)
Expn -1.2% …Expected -0.2% …Previous -0.3%

DATA YESTERDAY
—————
7:00 12:30 UK Unemp
Expn 4.2% …Expected 4.0% …Previous 4.2% …Actual 3.8%

7:30 13:00 CH CPI
Expn 1.4% …Expected 1.6% …Previous 1.7% …Actual 1.3%

13:30 19:00 US CPI (MoM)
Expn 0.39% …Expected 0.2% …Previous 0.23% …Actual 0.31%

13:30 19:00 US Core CPI (MoM)
Expn 0.29% …Expected 0.3% …Previous 0.28% …Actual 0.39%