European flash Consumer confidence data and Lagarde’s speech is due today ahead of the FED meeting and Chair Powell’s speech later during the day. Markets could witness volatility through this week. Dollar Index and Euro tested 104.05 and 1.0835 before reversing while EURJPY and USDJPY have risen sharply post the BOJ meeting outcome yesterday to exceed past our targets of 164 and 150 respectively. Both pairs look further bullish for the near term now towards 165/166 and 152. Aussie and Pound could remain volatile within 0.65-0.67 and 1.27-1.29 region while USDCNY is stuck below 7.20. EURINR has sustained well above 90 for now, but could face some rejection towards 89.5 in the coming sessions. USDINR rose to 83.05 yesterday as expected but upside could be capped at 83.10 with a possible fall back to 82.90/80 seen soon.

Dollar Index (103.868) tested 104.05 as expected before falling back to current levels. Unless a strong and sustained break past 104 is seen, view is biased to see a fall towards 103 and lower in the medium term. Markets await FOMC meeting decision and guidance for interest rates ahead.

EURUSD (1.0864) tested 1.0835 before it recovered back. Now, interim support can be spotted around 1.0850 which if holds, can take it higher towards 1.09/95 in the coming sessions, else a fall to 1.08 could be seen. The European Commission would release its flash consumer confidence data today with ECB’s Lagarde’s speech also due during the day.

EURJPY (164.29) and Dollar-Yen (151.20) have risen past our expected levels of 164 and 150 respectively after the BOJ’s decision to scrap its yield curve control program and end negative interest rates that contributed to the weakening of the Yen. If both pairs continue to move up, a test to 165/66 and 152 respectively looks likely in the near term.

USDCNY (7.1986) is stuck below 7.20 for now.

RBA held the Official Cash Rate (OCR) steady at a 12-year high of 4.35% for the third consecutive meeting, signaling a pause in rate hikes. Following the news, Aussie (0.6554) tested the support at 0.65 as expected before stabilizing above it. While the support holds, a bounce towards 0.66/67 could be expected with an overall range of 0.65-0.67 to hold in the near term.

Pound (1.2718) dipped below our mentioned target of 1.27 to test 1.2667 before recovering back. While above 1.27, the immediate range of 1.27-1.29 is expected to hold.

USDINR (83.04) rose sharply towards 83.05 yesterday as expected but immediate upside could be capped at 83.10 from where a possible dip back towards 82.90/80 looks possible.

EURINR (90.1911) has sustained well above the level of 90 but chances of pair coming down towards 89.5 cannot be negated. Broad range of 89-91 may hold in the medium term.

The US Treasury yields have dipped slightly. The broad view remains positive to more rise from here and then a reversal. The outcome of the US Federal Reserve meeting tonight will be important to watch. The German yields remain higher and stable. View remains bullish. The yields can rise more from here. The Bank of Japan (BoJ) increased the interest rates from -0.1% to 0% to 0.1%. This is the first rate hike in the last 17 years. The 10Yr and 5Yr GoI are coming close to their key resistances. A strong break above the upcoming resistances might negate the fall that we have been expecting. Wait and watch.

The US 10Yr (4.29%) and the 30Yr (4.44%) yields have dipped slightly. View remains bullish to see a rise to 4.4% (10Yr) and 4.6% (30Yr) and then a reversal can be seen.

The German 10Yr (2.45%) and the 30Yr (2.61%) yields remain higher and stable. View remains bullish to see 2.6% (10Yr) and 2.7%-2.8% (30Yr) on the upside. 2.2% (10Yr) and 2.35% (30Yr) are key supports.

The 10Yr GoI (7.0981%) tested the key resistance level of 7.1%. A break above 7.1% can take the yield up to 7.15%-7.2% and will reduce the chances or delay the fall to 7% and lower that we have been expecting.

The 5Yr GOI (7.0872%) is heading up towards the 7.1%-7.12% resistance zone. The price action thereafter will need a watch to see if a reversal is happening or the upmove is extending.

Decent bounce/rally seen in most of the equities expect for Nifty and Shanghai. Dow Jones and DAX have to surpass 39200 and 18000 for further bullishness. Nifty has declined below 21900 and has scope to fall further in the near term. Nikkei looks bullish to break above its resistance and target new highs. Shanghai has fallen back but downside could be limited to 3050-3020.

Dow (39110.76, +0.83%) has moved up well within the 38500-39200 range. We have to wait for the range breakout to get clarity on whether the Dow will rise to 39500-39700 or fall to 38000.

DAX (17987.49, +0.31%) remains stable around 18000 and is keeping alive the chances of the rise to 18200-18500. Support is in the 17700-17500 region.

Nifty (21817.45, -1.08%) has declined below 21900 and is bearish to see 21500 and lower levels. The rise to 22500-23000 stands negated.

Nikkei (40003.6) bounced back towards 40000 from a low of 39408 after BOJ end its negative interest rate policy by raising it to +0.1% from -0.1%. Index is closed today. It may break above 40000 and rise further towards 41000 or higher.

Shanghai (3063.11, +0.01%) has come down from a high of 3090. However, as long as it sustains above 3050-3020, there could be chances of rise towards 3150-3200 in the coming days.

Crude Prices are near key resistance, which if holds, can produce a fall back. Gold can bounce back towards its upper end of the range if it manage to sustain above 2150 coupled with a decisive break above 2160. Silver and Copper can get a bounce while the support at 25 and 4.05-4.00 holds. The FOMC meeting outcome tonight would be crucial for Metals. The FED is expected to maintain status quo on interest rate tonight. Natural Gas is gradually moving up towards 1.8 but needs to rise past it for further bullishness.

Brent ($ 87.14) saw a rise to $ 87.70 yesterday. Key immediate resistance is at $ 88. While that holds, a fall back towards $ 86-85 can be seen. A break above $ 88, if seen, can lead to an extended rise towards $ 90.

WTI ($ 82.46) has seen a high of $ 83.11 so far. Key resistance is at $ 84-85. While that holds, a fall back can be seen towards $ 80.

Gold (2161.50) is getting good support around 2150. A decisive break above 2160 can take it back towards 2200. If that happens, the danger of falling towards 2120-2100 will get negated. For now, the broad 2150-2200 range remains intact.

Silver (25.16) tested 24.92 yesterday and has risen back slightly. While above 25, a rise towards 26.00-26.30 might be possible. Only a break lower, if seen, would be vulnerable to a fall towards 24.50.

Copper (4.0725) has fallen sharply below 4.10. Key Support is seen at 4.05 and then lower at 4.01-4.00. While these holds, chances of rise towards 4.20-4.30 will remain intact.

Natural Gas (1.7520) is gradually moving up towards the upper end of the 1.6-1.8 range. A decisive break above 1.8 is needed to rise towards 2.0. Else a fall towards 1.5 cannot be ruled out. Overall a broad range of 1.5-2.0 can hold for some time.

7:00 12:30 UK CPI Y/Y
Expn 3.7% …Expected 3.5% …Previous 4.0%

19:00 00:30 US FOMC Meeting
Expn 5.50% …Expected 5.50% …Previous 5.50%

DATA YESTERDAY
—————
3:00 08:30 BOJ Meeting
Expn – …Expected -0.10% …Previous -0.10% …Actual 0.10%

3:30 09:00 RBA Meeting
Expn – …Expected 4.35% …Previous 4.35% …Actual 4.35%

12:30 18:00 US Housing Starts
Expn 1495K …Expected 1430K …Previous 1374K …Actual 1521K

12:30 18:00 CA Inflation Y/Y
Expn – …Expected – …Previous 2.9% …Actual 2.8%

20:00 01:30 US TICS (Net foreign purch of long-term Sec)
Expn – …Expected 95.5$ Bln …Previous 160.2$ Bln