The sell-off in Dollar seen after the US CPI release has recovered partially. The US Initial Jobless claims came in lower at 222K (Prev 232K) while Industrial Production came out at a stable rate. The Dollar Index is headed towards 105 while the Euro can fall to 1.08 while respective support and resistance holds well at 104 and 1.09 respectively. USDJPY and EURJPY have bounced back well and could rise towards 157/158 and 170 respectively. USDCNY has also managed to bounce back sharply and could now be headed towards 7.24 again. A broad range of 7.20-7.24 seems to be holding well. Aussie has dipped on Dollar strength and could be headed towards 0.6650-0.66. The pound fell from 1.27 itself and is headed towards 1.26. USDINR could continue trade within 83.40-83.55. EURINR is holding below 91 and could test 90.50-90 in the near term.

Dollar Index (104.649) held the level of 104 quite well and recovered a bit from there. A strong break past 105 will be needed to make the outlook bullish towards 106-107 in the medium term.

After facing rejection around 1.09, EURUSD (1.0855) has come down a bit. The pair needs to necessarily break below 1.08 to turn bearish in the medium term. Else, the view remains intact to see a rise towards 1.09+ in the coming sessions.

Dollar-Yen (155.89) and EURJPY (169.23) tested 153.6 and 167.33 before bouncing back sharply to recover all losses seen over the last 2-sessions. Both pairs are holding above the supports around 153 and 165. If the rise continues, a test to 157-158 and 170+ respectively looks likely to happen.

USDCNY (7.2264) opened with a gap up at 7.2250, bouncing back sharply from 7.2081. While above 7.20, the view is bullish for a rise towards 7.24. Thereafter, whether it rises further or falls back towards 7.20 will have to be seen.

Aussie (0.6664) has been coming off from 0.6714 on Dollar strength. If the Dollar Index rises above 105, the Aussie can fall below 0.6650-0.66 soon. Else, above 0.6650, there is some chance of testing 0.6750.

We had expected Pound (1.2657) to test the resistance at 1.28 before topping out. Instead, the pair declined from 1.27 itself. Going ahead, while above 1.26, we are retaining our view of seeing a rise towards 1.28. Only a break below 1.26 if seen would negate the anticipated rise and drag the Pound to lower levels of 1.25/24.

USDINR (83.5050) may hold above support at 83.40 and rise towards 83.50/55 again. We continue to look for the 83.40-83.55 range to hold for now.

EURINR (90.6637) has dipped from levels below 91 and could fall back towards 90.50-90.00 in the near term.

The US Treasury yields have risen back well. It is important now for it to sustain this bounce and get a strong follow-through rise from here to move higher. Else a further fall cannot be ruled out. The German yields have bounced back well from near their key supports. While the supports hold, the outlook is bullish and more rise can be seen from here. The 10Yr and 5Yr GoI bounced back sharply yesterday. The fall could be coming to an end as they are close to their support. The yields are likely to see a strong rise going forward.

The US 10Yr (4.37%) and the 30Yr (4.51%) yields have risen back again. Need to see if they sustain above 4.35% (10Yr) and 4.5% (30Yr). A strong follow-through rise from here is needed to avoid the fall to 4.2%-4.1% (10Yr) and 4.4%-4.3% (30Yr). We will have to wait and see.

The German 10Yr (2.46%) and the 30Yr (2.60%) yields have risen back. The support at 2.4% (10Yr) and 2.5% (30Yr) holds well. While above these supports, the outlook will remain bullish to see 2.6% (10Yr) and 2.7% (30Yr) on the upside. The supports have to be broken for a fall to 2.3% (10Yr) and 2.4% (30Yr).

The 10Yr GoI (7.0758%) and the 5Yr GOI (7.0680%) have bounced back sharply from their lows. 7.02%-7% is a strong support zone which can halt the current fall. While the 10Yr is yet to test this support the 5Yr has already touched it. A strong rise from this support zone will be bullish for a rise to 7.2%-7.3% over the medium-term.

Dow Jones has come down a bit after testing its crucial resistance. Failure to rise past it can trigger a corrective fall soon. DAX has fallen back but the overall outlook will remain bullish while above 18500. Nifty has bounced sharply towards 22500 and has scope to rise further towards 22800. Nikkei is stuck within its 38000-39000 range but can potentially break on the upside soon. Shanghai remains lower but the support at 3100 is expected to hold and lead to a rise towards its key resistance.

Dow (39869.38, -0.10%) touched 40000 and has come down. Failure to break 40000 decisively can trigger a corrective fall to 39600-39500. A break above 40000 can take it upto 40200-40300. It will also keep the upside open to see 41000-42000.

DAX (18738.81, -0.69%) has come down. But while above 18500, the bullish view is intact to see 19100-19200.

Nifty (22403.85, +0.92%) has risen back sharply from the low of 22055. That keeps the bias bullish to break 22500 and rise to 22800 in the near term.

Nikkei (38792.00, -0.33%) tested 38949 yesterday and has dipped from there. For now, the 38000-39000 range trade remains intact. Support is at 38000 and then at 37800. While these hold, chances of break above 39000 and rise towards 40000 or even 41000 will remain alive.

Shanghai (3121.32, -0.03%) seems to be gradually coming down towards the support at 3100. While 3100 holds, a rise towards the key resistance at 3200 can still be seen. Thereafter, a corrective fall can happen towards 3100-3000.

Lower US CPI figures last week and Dovish comments from FOMC member Bostic are keeping commodity prices higher. Bostic stated that it will be appropriate to cut interest rates this year if the economic outlook plays out as they expects. Gold, Silver, Copper and Natural Gas have all surged last friday and looks bullish for the near term.

Brent ($ 83.41) trades higher above $ 83 but could face resistance at $ 85-86. While these hold, chances of a fall towards $ 80-75 cannot be ruled out.

WTI ($ 78.86) tested $ 80 yesterday and has dipped slightly from there. If the resistance at $ 80-81 holds, the chances of a fall towards $ 75-70 cannot be ruled out.

Gold (2381.90) has risen above 2400 in line with expectations. Can rise towards 2450-2500. Thereafter, a dip towards 2400 might be seen.

Silver (31.78) has risen sharply towards 32.00 well beyond our expected level of 31.50. Looking at the force of rise, it looks bullish to break above 32 and rise further towards 33-34.

Copper (5.0825) did not come down to test 4.80-4.70 as expected. Instead has risen sharply towards 5.1. It looks like to break above 5.1 and rise towards 5.40-5.45 before a pause can be seen.

Natural Gas (2.6380) has risen sharply above 2.6. View is bullish for a rise towards 3.00 in the near term.

9:00 14:30 EU CPI (YoY)
Expn 2.1% … Expected – … Previous 1.8%

Data Yesterday
…………..
23:50 05:20 JP GDP
Expn – … Expected -0.4% … Previous 0.1% …Actual -0.5%

1:30 07:00 Australia Labour Force
Expn – … Expected 25.3K … Previous -5.9K …Actual 38.5K

12:30 18:00 US Philifed Index
Expn – … Expected 7.7 … Previous 15.5 …Actual 4.5

12:30 18:00 US Housing Starts
Expn 1351K … Expected 1430K … Previous 1287K …Actual 1360K

13:15 18:45 US Industrial Production (MoM)
Expn -0.22% … Expected 0.2% … Previous 0.19% …Actual 0.00%

13:15 18:45 US Capacity Utilization (YoY)
Expn 78.4% … Expected – 78.4% … Previous 78.5% …Actual 78.4%