Surprise rate cut (25bps) by the Swiss National Bank (SNB) yesterday led to major volatility in the forex markets as major currencies plunge against the US Dollar. Dollar Index is rising towards 104.30/50 while Euro could test support at 1.08. USDJPY has risen to trade below crucial long term resistance at 152, a break above which if seen will be a signal for a fresh rally. EURJPY trades below 165 for now and could test 163/162. Aussie and Pound are sharply down and headed towards 0.65 and 1.26/2550 respectively. USDCNY has finally broken above 7.20, resolving from its consolidation since Jan-24 to the upside. EURINR is headed towards 90/89 while USDINR is likely to open with a gap up on the onshore markets and head towards 83.30 or higher. NDF currently quotes 83.26/27.

EURUSD (1.0844) plunged from 1.0942 yesterday and Dollar Index (104.132) rose sharply after the Swiss National Bank’s surprise interest rate cut from 1.75% to 1.5%. An interim resistance can be spotted around 104.30/104.50 on the Dollar Index while 1.08 is an immediate support on the Euro and these levels are likely to hold for the near term and to produce reversals towards 103/102 and 1.0950 again in the medium term.

EURJPY (164.36) tested 165.34 yesterday before coming off from there while Dollar-Yen (151.57) recovered the losses seen yesterday and managed to bounce back sharply from 150.26 to close above 151.50. Note that USDJPY is trading just below crucial long-term resistance at 152 which is expected to hold and produce a fall but if manages to break higher could end up in a surprise rally towards 154 and higher eventually. Watch price action near 152 closely.

USDCNY (7.2215) has finally broken above 7.20, meeting our bullish expectations after consolidation below 7.20 since Jan-24. We may expect a test of 7.24/25 before a slight dip is seen again in the near term. Now 7.20 is an important support for the medium term.

Aussie (0.65332) has fallen sharply along with the Euro from 0.6635 seen yesterday contrary to our expectation of a rise towards 0.67/68. A re-test of 0.65 is likely in the early sessions next week.

Pound (1.2641) also plunged from 1.2803 yesterday breaking below 1.27 to trade at current levels of 1.2640. Bears seem to be dominating just now and could take Pound further down towards 1.26/1.2550 if the momentum persists. Our earlier expectation of a rise to 1.29 stands negated for the near term.

USDINR (83.1525) tested a low of 83.0375, respecting the support at 83 before closing the day higher at 83.1525 yesterday. With sharp movements in currencies globally post the surprise rate cut from the SNB, USDINR currently quotes 83.26/27 on the NDF indicating a possible gap up opening on the onshore markets today which could end up in a sharp rally towards 83.30. Thereafter, we will have to see if the pair manages to rise further or comes off towards 83 again by end of next week.

EURINR (90.3033) failed to sustain its rise towards 91 and declined sharply upon testing 90.94 on the upside. The pair can fall towards the lower end of the 89-91 range in the next few sessions.

The US Treasury and the German yields remain stable. The Treasury yields have support near current levels while above which a further rise can be seen in the coming days. Only a break below those supports will trigger a fall from here itself. The German yields remain bullish to rise more before a reversal happens. The 10Yr and 5Yr GoI have declined sharply failing to break their resistances. The 10Yr has resumed its downtrend and can fall more. The 5Yr can oscillate within a range.

The US 10Yr (4.26%) and the 30Yr (4.43%) yields remain stable. We repeat that a break below 4.2% (10Yr) and 4.4% (30Yr) is needed to drag the yields down to 4% (10Yr) and 4.2% (30Yr). Else a rise to 4.4% (10Yr) and 4.6% (30Yr) cannot be ruled out before a reversal is seen.

The German 10Yr (2.40%) and the 30Yr (2.58%) yields remain stable. We retain our bullish view of seeing rise to 2.6% (10Yr) and 2.7%-2.8% (30Yr). 2.2% (10Yr) and 2.35% (30Yr) are key supports.

The 10Yr GoI (7.0477%) has declined sharply. The resistance at 7.1% has held very well thereby keeping the broader downtrend intact. The yield can now fall to 7%-6.9% in the coming days.

The 5Yr GOI (7.06%) has come down below 7.08%. A further fall to 7.04% and 7% can be seen now. The 7%-7.1% can be the trading range for now.

Rally continues in Dow Jones and DAX. Dow Jones needs to break above 40000 for further bullishness. DAX and Nikkei have scope to test their resistance before a fall back could be seen. Nifty has key resistance overhead. Need to see if Nifty breaks higher or fall back from there. Nikkei remains bullish for the near term. Shanghai have fallen sharply breaking below its support but might get support at 3020-3000.

Dow (39781.37, +0.68%) rose to 39889 and has come down slightly. 39300-39200 can be good support now. A break above 40000 can take the Dow up to 40400. The price action thereafter will need a watch for a reversal.

DAX (18179.25, +0.91%) is heading up towards 18200. The upside can extend up to 18500 before a reversal is seen.

Nifty (22011.95, +0.79%) oscillated around 22000 yesterday. 21900 and 22250 are key levels to be watched. A breakout on either side of these levels will decide whether the Nifty can rise to 22500 and higher or fall to 21500 and lower. Wait and watch.

Nikkei (40854, +0.05) continues to inch up. A rise towards 41700-42000 looks possible before a fall back might be seen towards 41000.

Shanghai (3035.02, -1.37%) has declined sharply below 3050. Next immediate support is seen at 3020-3000. While these holds, chances of rise towards 3150-3200 will remain there.

Most of the commodities have fallen. Brent and WTI looks vulnerable to a break below $ 85 and $ 80, respectively and fall further. Metals couldn’t sustain the rise/bounce seen after FOMC meeting and has fallen back sharply. Outlook is bearish for metals in the near term. Natural gas remains stable but looks vulnerable to a fall towards 1.6-1.5. Market may remain volatile with FED chair Powell and FOMC member Barr speech later in the day.

Brent ($ 85.16) has declined towards $ 85. It may break below $ 85 and fall further towards $ 84.50-83.50-83.

WTI ($ 80.46) is heading down towards $ 80. It may break below $ 80 fall towards $ 78.70 or even lower towards $ 76-75 while below the resistance at $ 83-84.

Gold (2177.05) has tumbled below 2200 contrary to our view for a further towards 2250-2300. A dip towards 2150 looks possible. If 2150 holds, a bounce back towards 2200 can be seen. Else it can fall further towards 2100.

Silver (24.74) has fallen sharply below 25 after facing rejections from 26 contrary to our view for a test of 26.20-26.30. While the fall sustains below 25.50, a further dip towards 24.50-24.00 could be seen.

Copper (4.0285) rose to 4.1280 yesterday but couldn’t sustain the bounce and has declined sharply below 4.05. The rise towards 4.20-4.30 that we have been expecting has reduced now. It can fall to 4.00-3.95. After that, a bounce can be seen towards 4.05-4.10.

Natural Gas (1.7070) remains ranged within 1.8-1.6. A dip towards 1.6-1.5 cannot be ruled out while it stays below 1.8.

23:30 05:00 JP CPI
Expn 1.5 …Expected – …Previous 2.1

0:05 05:35 UK Cons Conf
Expn -24 …Expected -19 …Previous -21

9:00 14:30 GER IFO Business Climate
Expn 86.1 …Expected – …Previous 85.5

9:00 14:30 GER IFO Business Situations
Expn 85.9 …Expected – …Previous 86.9

9:00 14:30 GER IFO Business Expectations
Expn 85.4 …Expected – …Previous 84.1

DATA YESTERDAY
—————
0:30 06:00 Australia Labour Force
Expn – …Expected 39.2K …Previous 15.2K …Actual 116.5K

8:30 14:00 SNB Mtg
Expn – …Expected 1.75% …Previous 1.75% …Actual 1.50%

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

12:00 17:30 UK BOE Minutes
Expn – …Expected 0-1-8 …Previous 2-1-6 …Actual 0-1-8

12:30 18:00 US Philifed Index
Expn – …Expected -1.8 …Previous 5.2 …Actual 3.2

12:30 18:00 US Current Account Balance
Expn – …Expected -209 …Previous -196 …Actual -195

14:00 19:30 US Existing Home Sales
Expn 3867K …Expected 3920K …Previous 4000K …Actual 4380K