A sharp fall in the Dollar Index post US CPI and Retail sales data release yesterday has taken most currencies higher against the Dollar while USDJPY and EURJPY have declined sharply. The dollar Index could test 104-103 while Euro faces the first hurdle at 1.09 above which the view is bullish to 1.10. USDJPY and EURJPY can hold above 153 and 165 respectively while the Yuan could strengthen to 7.20. Aussie needs to hold below 0.6750 while Pound could test resistance at 1.28 while above 1.26. EURINR could dip from 91 else could turn bullish towards 92. USDINR is likely to hold within the range of 83.40-83.55 for the near term. Watch out for EU CPI, US Housing starts, Jobless claims and US Industrial production data releases scheduled today.

Dollar Index (104.192) has fallen sharply below our expected target of 104.5 after the US CPI came lower at 3.62% than the previous release of 3.8% (Y/Y) and Retail sales dipped to -0.01% (M/M) from previous 0.77%. If the index breaks below 104, then it would be vulnerable to test 103.5-103 on the downside before possibly bottoming out.

EURUSD (1.0887) has risen past 1.0850 and tests the 1.09 hurdle. If an immediate fall is not seen from current levels, we may expect further bullishness towards 1.0950/10 in the coming sessions.

Dollar-Yen (153.87) and EURJPY (167.50) have declined, contrary to our expectations of seeing a rise towards 157/158 and 170 respectively. Going ahead, supports are visible around 153 and 165 respectively which could hold the decline.

USDCNY (7.2148) extended the fall to below our mentioned level of 7.22. Now whether the fall halts at 7.20 or gets dragged towards 7.18 will have to be seen. Watch price action around 7.20 for a possible bounce.

Aussie (0.6689) rose sharply to test 0.6714 after the AU unemployment rate rose to 4.1% for April, higher than 3.8% seen for Mar-24. Aussie has cooled off a bit coming down below 0.67. There is still enough room on the charts to test 0.6750 on the upside before coming down towards 0.65 or lower in the medium term. Above 0.6650, there is a fair chance of testing 0.6750.

Pound (1.2691) has risen sharply above its range of 1.2450-1.26 on Dollar weakness and now if sustains, can test resistance at 1.28 in the near term before topping out.

USDINR (83.5050) closed at 83.5050 yesterday. Euro strength and Dollar weakness could take USDINR down to 83.40 today but we continue to look for a near-term range of 83.40-83.55 to hold.

EURINR (90.8462) has risen to almost test the first hurdle of 91 while above 90. If an immediate fall from 91 is not seen, an extended rise to 92.00-92.50 could open up for the next couple of weeks. Watch for a possible fall from 91 in the next few sessions.

The US Treasury yields have tumbled after the inflation data release yesterday. The US Headline CPI came in at 3.36% (YoY) for April, down from 3.48% in March. The Core CPI fell to 3.62% (YoY) from 3.8% over the same period. If the yields sustain lower, they can fall more from here. That will negate the bounce back move that we have been expecting. The German yields have also declined sharply. But support is coming up for them. These supports have to hold to keep the chances alive for a rise back and avoid a deeper fall. The 10Yr and 5Yr GoI are coming down as expected and are keeping intact our near-term bearish view.

The US 10Yr (4.31%) and the 30Yr (4.48%) yields have tumbled. The 10Yr has dipped below 4.35%. While this sustains a further fall to 4.2%-4.1% is possible. Similarly, the 30Yr can fall to 4.4%-4.3% while it sustains below 4.5%.

The German 10Yr (2.42%) and the 30Yr (2.57%) yields have come down sharply. Crucial support at 2.4% (10Yr) and 2.5% (30Yr) has to hold to keep alive the chances of rising to 2.6% (10Yr) and 2.7% (30Yr). A break below these supports can drag the yields down to 2.3% (10Yr) and 2.4% (30Yr) initially.

The 10Yr GoI (7.0821%) and the 5Yr GOI (7.0775%) are continuing to fall. The view of seeing 7% on the downside remains intact on both the yields. Thereafter they can rise back again from around 7%.

Decent rise was seen in Dow Jones, DAX, and Nikkei after softer US CPI data. Nifty has dipped slightly yesterday but can bounce back taking cues from the global markets. Nikkei might break above the upper end of the 38000-39000 range and target further upside. Shanghai has dipped below 3150 but the downside might be limited to 3100.

Dow (39908, +0.88%) has surged towards 39900 much faster than expected. A sustained break above 40000 can see an extended rise to 41000-42000 and will avoid a reversal from here itself. The price action in the next few days will need a watch.

DAX (18869.36, +0.82%) has risen back. It keeps intact our bullish view of seeing 19100-19200 on the upside.

Nifty (22200.55, -0.08%) came down yesterday. But it can rise back today taking cues from the global markets. That will keep intact our view of seeing 22500-22800 on the upside. The broader 21800-22800 range remains intact for now.

Nikkei (38631.50, +0.65%) is moving up towards the upper end of the 38000-39000 range. It might break above 39000 and rise towards 40000 or even 41000.

Shanghai (3130.24, +0.33%) remains subdued. Support is at 3100. While that holds, a test of key resistance at 3200 is possible. Thereafter, a corrective fall can be seen towards 3100-3000.

Crude prices have recovered whereas Metals have risen sharply after the release of softer US CPI data. Crude prices could face resistance overhead, which if holds, can keep the bearish view intact. Metals and Natural Gas looks bullish for the near term.

Brent ($ 83.10) bounced back after testing a low of $ 81.05. Resistance is at $ 85-86.50. While that holds, chances of a fall towards $ 80-75 cannot be ruled out.

WTI ($ 79.02) has recovered from a low of $ 76.70. Key resistance is at $ 80-80.50. While that holds, the chances of a fall towards $ 75-70 will remain alive.

Gold (2396.50) has risen sharply towards 2400. It may break above it and rise towards 2450-2500. If 2500 holds, a dip towards 2400 could be seen.

Silver (29.93) has risen sharply above 29. While above 29, the view is bullish for a rise towards 30.30/50 and even 31.00-31.50. After that, a corrective fall could be seen towards 29.

Copper (4.98) rose sharply to 5.13 yesterday in line with expectations for a test of 5.10-5.15 and has dipped a bit from there. Immediate support is at 4.90. While that holds, a rise back towards 5.10-5.15 is possible. A break above 5.15, if seen, can be further bullish towards 5.40-5.45.

Natural Gas (2.4130) is heading towards 2.50 as expected. A further rise towards 3.00 could be seen in the near term.

23:50 05:20 JP GDP
Expn – … Expected -0.4% … Previous 0.1%

1:30 07:00 Australia Labour Force
Expn – … Expected 25.3K … Previous -6.6K

12:30 18:00 US Philifed Index
Expn – … Expected 7.7 … Previous 15.5

12:30 18:00 US Housing Starts
Expn 1351K … Expected 1430K … Previous 1321K

13:15 18:45 US Industrial Production
Expn -0.2% … Expected 0.2% … Previous0.4%

13:15 18:45 US Capacity Utilization
Expn 78.4% … Expected – … Previous 78.4%

Data Yesterday
…………..
9:00 14:30 EU Flash GDP
Expn – … Expected 0.3% … Previous 0.3% …Actual 0.3%

9:00 14:30 EU Ind Prodn (MoM)
Expn -1.0% … Expected -0.3% … Previous 1.0% …Actual 0.6%

9:00 14:30 IN Trade bal
Expn -17.45 … Expected – … Previous -15.60 …Actual -19.10

12:30 18:00 US CPI (MoM)
Expn 0.3% … Expected 0.4% … Previous 0.4% …Actual 0.3%

12:30 18:00 US Core CPI (MoM)
Expn 0.4% … Expected 0.3% … Previous 0.4% …Actual 0.3%

12:30 18:00 US Retail Sales (MoM)
Expn 0.9% … Expected 0.4% … Previous 0.8% …Actual 0.0%

20:00 01:30 US TICS (Net foreign purch of long-term Sec)
Expn – … Expected 89.3B … Previous 62.9B …Actual 100.5B