The Dollar Index fell as expected and is likely to test 104 while Euro shot up above our expected level of 1.08 and could further test 1.09 before possibly halting. USDJPY continues to remain stable within the 151–152 region, EURJPY is headed towards 165-166 on the upside. Aussie and Pound need to be cautious as they may face rejection from 0.66 and 1.27 respectively. USDCNY is closed today. USDINR has held the resistance of 83.50 quite well so far but we would be cautious of a possible test/break above 83.50 in case RBI’s intervention is not seen at 83.50. EURINR has risen well but an interim resistance can be spotted around 90.70-91.00 which if held, can bring it back towards 89.50 or lower in the near term.

Dollar Index (104.203)has come off sharply as expected and could soon test our mentioned target of 104 on the downside. Thereafter if the support at 104 sustains, we may see some recovery towards 104.50-105. Else, failure to bounce from 104 could drag the index down to 103.5-103 before possibly bottoming out. Watch price action near 104.

EURUSD (1.0840) surprised by extending beyond the expected interim resistance at 1.08 and could now test 1.09-.0950 if the rising momentum sustains. Overall, a wide range of 1.07-1.09/0950 may hold in the near term. Softer European inflation yesterday boosted sentiments of a possible June rate cut from the ECB.

EURJPY (164.48) has risen sharply in line with our expectations and could soon test the upper target of 165-166 in the coming sessions before pausing.

Dollar-Yen (151.68) continues to remain stable within the 151–152 region and a decisive break on the either side of the range will be needed for further directional clarity.

USDCNY (7.2325) is closed today. Overall, the pair necessarily needs to break past 7.24 to maintain bullishness in its trend; otherwise, a decline towards 7.21/20 while below 7.24 looks more likely.

Aussie (0.6577) and Pound (1.2650) seem to be holding well above their respective supports of 0.65 and 1.25 respectively. Interim rejection can be possible near 0.66 and 1.27 respectively, unless a decisive break past these levels is seen. If the respective resistances hold, the pairs may continue to trade within a narrow range of 0.65-0.66 and 1.25-1.27 before a break can be seen in the longer run.

USDINR (83.44) closed at 83.44 yesterday and quotes higher at 83.47/48 on the NDF just now. Although we have been looking for a decline from resistance at 83.50, we would have to allow for some upward pressure on the Dollar-Rupee on account of traders on the exchanges having to unwind their positions (which is largely Short, as per conversations we’ve had) ahead of the 5th April 2024 deadline for the RBI’s “underlying exposures needed for ETCD” regulation. For now, the market seems to be relying on the RBI to take the other side of the trade of the short unwinding. IN CASE the RBI does not come in to supply Dollars then there could be chances of a test/ break above 83.50. In short, RBI must sell at 83.50 for it to hold. Watch price action near 83.50.

EURINR (90.5338) has risen well above 90 but could face some rejection around 90.70-91.00 which could drag it down again towards 90-89.5 in the coming sessions. Overall, its broader range of 91–89 is expected to hold for a while before a break can be seen on the either side.

The US Treasury yields sustain higher. We reiterate that resistances are ahead which if broken can see an extended rise in the yields before a reversal is seen. The German yields are poised just below the upper end of their range. We will have to wait and see if they can break the range on the upside or not. The 10Yr GoI has dipped. But if it holds above the immediate support, it can rise in the coming days. The 5Yr GoI remains stable within its sideways range. The RBI meeting outcome tomorrow will need a close watch.

The US 10Yr (4.35%) and the 30Yr (4.51%) yields are higher but stable. 4.4% (10Yr) and 4.55%-4.6% (30Yr) can be tested. Whether the yields are breaking above these resistances or not will decide whether they can go up to 4.6% (10Yr) and 4.8% (30Yr) or fall back to 4.2% (10Yr) and 4.6% (30Yr). We will have to wait and watch.

The German 10Yr (2.39%) and the 30Yr (2.57%) yields have dipped slightly. They are poised near the upper end of their 2.2%-2.45% (10Yr) and 2.4%-2.6% (30Yr) range. A bullish breakout can take the yields up to 2.6% (10Yr) and 2.7%-2.8% (30Yr). We will have to wait and see.

The 10Yr GoI (7.1030%) has come-off but sustains above 7.1%. A strong follow-through rise from here can take it up to 7.15%-7.2%. A fall below 7.08% will negate this rise and can drag it down to 7% again.

The 5Yr GOI (7.0841%) has dipped within its 7%-7.12% range. As mentioned yesterday, a break above 7.12% is needed to become bullish for a rise to 7.2% and higher.

Hawkish comments from FED Chair Powell and Atlanta Fed President Bostic along with Strong US ADP employment figure have dragged Dow Jones further down. Bostic said that it will be appropriate to cut rate at the end of this year. DAX has bounced back but has to rise past 18500 to negate our bearish view. Nikkei looks mixed and is likely to trade sideways above 39000 for a while. Nifty lacks follow through rise. A decisive break above 22500 is needed to become further bullish, else there could chances of falling from here.

Dow (39127.14, -0.11%) has dipped further but is holding well above the support at 39000. While above 39000, the bullish view of the rise to 40200 will remain intact. The rise will get negated only if a break below 39000 happens in which case 38800-38500 can be seen on the downside.

DAX (18367.72, +0.46%) has bounced back. But, a strong and sustained rise above 18500 is needed to negate the fall to 18000-17800. We will have to wait and watch.

Nifty (40182.50, -0.08%) is struggling to get a sustained rise above 22500 which is necessary to increase the bullishness towards 22700 and 23000. While below 22500, a gradual fall to 22200 and lower can be seen. Can continue to stay and watch for more clarity.

Nikkei (39498.50, +1.78%) has bounced sharply after testing a low of 39217.04. Outlook is mixed. A range of 39000-41000 could hold for some time.

Shanghai (3069.30, -0.18%) is closed today. We expect the Support at 3050/3040 (revised from 3050/3020) to hold and produce a bounce towards 3150-3200. A break above 3090/3100 can trigger this rise. It may trade sideways within 3040-3090 for some time before a breakout on upside could be seen.

Crude prices have risen further after OPEC+ decided to maintain its crude output cut until end of Jun-24. Strong rally is seen in Metals after FED Powell’s comment who stated that it is not appropriate to cut rate until they gained confidence that inflation is sustainably heading down towards 2% target. However, if economy evolves as per their expectations, then FED can cut rate at some point this year. Gold, Silver and Copper have some more room to rise in the near term. Natural has dipped slightly but the support at 1.80 is likely to hold and produce a bounce.

Brent ($ 89.57) has risen towards $ 90. It might break above $ 90 and rise towards $ 91-92.

WTI ($ 85.66) has risen well above $ 85. It may rise further towards $ 88-$ 90 from here.

Gold (2320.70) has moved up towards 2325. A rise towards 2350-2400 looks possible while it remains above 2290.

Silver (27.32) has moved up sharply to 27.46 in line with expectations for a rise towards 27.50. A test of key resistance at 28.00 can be seen while above 27.15. Thereafter we need to see if turns lower from 28.00 or breaks higher towards 29.00.

Copper (4.2355) has risen well above our expected level of 4.20 and has scope to rise further to 4.30-4.36 before a pause can be seen.

Natural Gas (1.8460) has dipped slightly from a high of 1.9060. Support is at 1.8. While that holds, chances of rise to 2.00 will remain there.

5:00 10:30 IN Services PMI
Expn 60.0 …Expected 60.3 …Previous 60.6

6:30 12:00 CH CPI
Expn 1.0 …Expected 1.3 …Previous 1.2

12:30 18:00 US Trade Balance
Expn – …Expected -66.9 …Previous -67.4

DATA YESTERDAY
—————
22:30 04:00 AU PMI
Expn -10.6 …Expected – …Previous -12.6 …Actual -7.0

9:00 14:30 EU Unemp
Expn 6.5% …Expected 6.4% …Previous 6.4% …Actual 6.5%

9:00 14:30 EU Flash CPI (YoY)
Expn 2.2% …Expected 2.5% …Previous 2.6% …Actual 2.4%

12:15 17:45 US ADP Emp
Expn – …Expected 149K …Previous 140K