Volatility was seen in the Dollar Index yesterday after lower US CPI was released and FED meeting where the rates were kept unchanged but signaled one rate cut in 2024 revising from earlier estimate of 3-rate cuts in the year. Dollar Index and Euro could trade within 104-105.50 and 1.07-1.09 respectively while Aussie and Pound had surged higher past the expected range but have managed to recover from there. Unless a decisive break is seen, the range of 0.6580-0.6720 and 1.28-1.26 respectively can hold for some time. EURJPY is nearing the upper end of its range of 168-170, while USDJPY can trade within 156-158 region. USDCNY had slipped sharply to 7.2375 but has recovered from there. EURINR can trade within 89.50-91.25 region for some time. USDINR is likely to sustain trade within 83.60-83.30 region with upside capped at 83.60 for the near term.

Dollar Index (104.786) fell sharply from 105.32 yesterday o 104.25 before recovering from there now. While above 104.25, the index can sustain its range of 104-105.50. However, a break above 105.50 will open the door for 106-106.50 in the medium term.

EURUSD (1.0804) rose sharply to test 1.0852 along with the sharp fall in the Dollar Index but has fallen back to 1.08 again this morning. Now, we expect Euro to trade sideways between 1.07-1.09 in the near term both being important support and resistance levels.

Dollar-Yen (156.95) was expected to test 158 but instead it reversed from 157.37 itself, dragged down by the weak Dollar. An immediate support can be seen around 156 and while that holds, a narrow range of 156-158 can hold for sometime. Thereafter, whether the rise gets halted or extends further up will have to be seen.

EURJPY (169.61) is nearing the upper end of its range of 168-170. The pair needs to necessarily break on the upside for a rise towards 170-171. Else it can fall towards 169-168 in the near term. Immediate range of 170-168 can persist for a while.

USDCNY (7.2502) had dropped significantly to the lower level of 7.2375 due to the Dollar weakness before recovering from there. Currently it looks stable above 7.25 and if sustained, can target 7.26-7.28 in the medium term.

Aussie (0.6649) and Pound (1.2787) tested the upper end of their range of 0.6580-0.6720 and 1.26-1.28 respectively and even surpassed it a bit before declining from there. A strong break past 0.67 and 1.28 respectively will be needed to continue the uptrend, else the range may persist for a while and bring down the rates in the next few sessions.

USDINR (83.55) tested a high of 83.5650. The expected resistance at 83.60 is holding well for now. A range of 83.60-83.30 can hold for a while.

EURINR (90.2572) continues to remain volatile within its range of 89.50-91.25. Until a decisive break on either side of the range is seen, we expect the range to hold.

The US Treasury yields have declined sharply. Inflation data and the Fed meeting outcome had dragged the yields lower. The yields have room to fall further and then can reverse higher again. The Fed kept the rates unchanged at 5.25%-5.5% as expected. But their forecast showed that there will be only one rate cut possible this year as compared to their previous forecast for three rate cuts. The US Headline inflation eased to 3.25% (YoY) in May from 3.36% in April. The German yields have also declined sharply. They are poised in their support zone which we expect to hold. The yields can bounce back and keep the broader uptrend intact. The 10Yr and 5Yr GoI remains stable and mixed within their broad sideways range.

The US 10Yr (4.31%) and the 30Yr (4.48%) yields fell sharply. The yields are heading down towards 4.3%-4.2% (10Yr) and 4.4%-4.35% (30Yr) in line with our expectation. After this fall, the chances of the yields rising back again cannot be ruled out.

The German 10Yr (2.53%) and the 30Yr (2.69%) yields have declined sharply. The yields are now in their 2.55%-2.5% (10Yr) and 2.7%-2.65% (30Yr) support zone. We expect the yields to bounce back from here and keep the broader uptrend intact to target 2.8%-2.9% (10Yr) and 3% (30Yr) over the medium-term.

The 10Yr GoI (7.0609%) and the 5Yr GOI (7.0208%) yields remain stable. The broader 7%-7.12% range is intact. The immediate outlook remains mixed within it.

Dow Jones has come off sharply after the lower CPI data release and the FED policy meeting yesterday. It needs to sustain above 38000 to turn bullish again in the medium term. DAX is holding well above support at 18200 while Nikkei and Shanghai have dipped from today’s opening levels. Supports near 38500 and 3000 need to hold in the near term for a bounce back. Nifty is struggling to get a sustained rise past 23400. Need to watch if it manages to break higher or falls back towards 22750/22500.

Dow (38712.21, -0.09%) has come down sharply from the high of 39120. Failure to sustain above 39000 keeps alive the danger of the fall to 38000.

DAX (18630.86, +1.42%) has risen back sharply. The 18200 support is holding well. This keeps intact our bullish view of seeing 19000 and higher levels. A rise above 18800 can open the doors for this rise.

Nifty (23322.95, +0.25%) is still struggling to get a sustained rise above 23400. We repeat a strong rise above 23500 will be needed to see 23800-24000 on the upside. Else there is a danger of a fall to 22750-22500. A break below 23150 can trigger this fall. Need to be cautious while the Nifty sustains below 23400-23500.

Nikkei (38929.60, +0.14%) opened at 39182 today but has dipped from there. Key support is seen near 38500. While that holds, chances of a slow rise towards 40000 in the near term will remain intact. Any decline if seen can be limited to 38500 in the near term.

Shanghai (3030.05, -0.26%) looks bearish below 3050 towards 3000. Watch price action at 3000 for a bounce towards 3050-3100 else the index could be vulnerable to break lower and head towards 2950-2900 in the medium term.

Crude prices and Metals saw a decent rally after the release of softer US CPI data yesterday but have seen some correction after the FED kept the interest rate steady and revised its rate cut outlook to just only one from three rate cuts expectation earlier.

Brent ($ 82.28) and WTI ($ 78.45) moved up, breaking above their respective resistances at $ 82.50 and $ 79 but have come down overnight. Trading near crucial levels, it would be important to watch if the rally sustains higher in the near term or if the prices fall back towards $ 78/77 and $ 74/72 respectively. If prices move up, they can extend to $ 85 (Brent) and $ 80-81(WTI). For now, bearishness is possible while below the resistances.

Gold (2329.20) rose to 2359 before coming off from there below 2350. Gold can fall towards 2300 or slightly lower to 2280/2260 in the coming days before halting its current dip.

Silver (29.17) rose to test 30.36 yesterday but has dipped slightly from there. Unless a sustained break above 30 is seen, a fall towards near term support zone of 28.80/28.00 can be seen.

Copper (4.5155) rose to 4.61 before coming off to current levels. As long as it holds below the resistance at 4.60-4.70, a dip towards 4.3-4.24/4.20 cannot be ruled out.

Natural Gas (3.0170) has fallen towards 3.0 as the resistance at 3.2 seems to be holding well for now. While below 3.2, a further dip towards 2.9-2.8 could be seen.

1:30 07:00 Australia Labour Force
Expn – … Expected 30.0K … Previous 38.5K

9:00 14:30 EU Ind Prodn (MoM)
Expn 0.0% … Expected 0.1% … Previous 0.6%

12:30 18:00 US PPI
Expn 0.1% … Expected 0.1% … Previous 0.5%

12:30 18:00 US PPI ex Food & Energy (MoM)
Expn 0.2 … Expected 0.3 … Previous 0.5

13:00 18:30 IN Trade bal
Expn -20.42 … Expected – … Previous -19.10

Data Yesterday
…………..
1:30 07:00 CN CPI (YoY)
Expn – … Expected 0.4 … Previous 0.3 …Actual 0.3

1:30 07:00 CN PPI
Expn – … Expected -1.5 … Previous -2.5 …Actual -1.4

6:00 11:30 UK Trade Bal
Expn -13.1 … Expected -14.2 … Previous -14.0 …Actual -19.6

12:00 17:30 IN IIP
Expn 5.7% … Expected 4.6% … Previous 4.9% …Actual 5.0%

12:00 17:30 IN CPI
Expn 4.93 … Expected 4.90 … Previous 4.83 …Actual 4.75

12:30 18:00 US CPI (MoM)
Expn 0.3 … Expected 0.1 … Previous 0.3 …Actual 0.0

12:30 18:00 US Core CPI (MoM)
Expn 0.3% … Expected 0.3% … Previous 0.3% …Actual 0.2%

18:00 23:30 US FOMC Meeting
Expn 5.50% … Expected 5.50% … Previous 5.50%