The dollar weakened on Euro and Yen strength yesterday after dovish comments from Chicago Fed President Goolsbee asking FED to be watchful on the tight-monetary policy. The downside could be limited to 105-104.70 for the Dollar Index while the Euro can rise towards 1.0750. Dollar-Yen tested 159.92 yesterday but dipped back amid verbal intervention from Vice Finance Minister Kanda while EURJPY continues to trade above 171. Aussie & Pound continue to trade within 0.6580-0.6720 and 1.26-1.28 region respectively. USDCNY is bullish towards 7.28 in the coming weeks while above 7.25/7.24. EURINR can trade within 89.00-90/91 region for some time. USDINR needs to break below 83.45/40 to move towards 83.30 again while upside could remain capped at 83.60/70 for the near term.

Dovish comments from Chicago Fed President Goolsbee on Fed to start thinking about whether restrictive policy is putting too much pressure on the economy led Dollar Index (105.43) to decline a bit from the high of 105.90. If the fall gets further extended, it could be short-lived to 105-104.70 before it attempts to rise back. In the medium term, our view remains intact to see a rise towards 106-106.30-106.50.

Reduced political uncertainty in France after President Macron’s announcement of a snap election and ECB’s hawkish comments on being data dependent and not pre-committing to a fixed rate path supported EURUSD (1.0735) to surge significantly past 1.07. An immediate resistance can be spotted around 1.0750, a decisive break past which will be needed to rise further. Else it can continue to trade within the narrow range of 1.0650-1.0750 and a broad range of 1.0650-1.08 for a while.

Dollar-Yen (159.33) declined post testing 159.92 while EURJPY (171.08) made a high of 171.45 before cooling down. This could be the result of verbal warnings from top currency official, Vice Finance Minister Kanda, to protect Yen against fluctuations. However, a fall below 158.50-158 on USDJPY will be needed to negate any immediate bullishness.

USDCNY (7.2620) looks stable above 7.26 for now and while it sustains, it has scope to rise further towards 7.28 in the medium term. Overall, view remains bullish above 7.24/25.

Aussie (0.6658) and Pound (1.2689) can continue to trade within their respective ranges of 0.6580-0.6720 and 1.26-1.28 respectively, unless a decisive break is seen on either side of the range.

USDINR (83.4650) observed a low of 83.4375 in line with our view of seeing a fall towards 83.45-83.40. Now, a break below 83.45/40 will be needed to come down towards 83.30. In the medium term, a rise towards 83.70/80 cannot be ruled out. We can expect a broad range of 83.67-83.35/30 to hold for this week.

EURINR (89.6286) continues to trade within its range of 89-90/91. Only a break below 89 if seen, could open doors for a fall to 88.50-88 in the medium term.

The US Treasury yields have dipped and are likely to fall more from here. Support can be tested and then a rise is possible. The German yields are attempting to bounce back from their crucial support as expected. A strong follow-through rise from here will negate the danger of breaking the support. We will have to wait and watch. The 10Yr and 5Yr GoI are holding well above their support. We can expect the yields to rise in the coming days.

The US 10Yr (4.27%) and the 30Yr (4.37%) yields have dipped further. Our view of seeing a fall to .2%-4.1% (10Yr) and 4.35%-4.25% (30Yr) remains intact while below 4.3%-4.35% (10Yr) and 4.5% (30Yr). A rise is possible after this fall.

The German 10Yr (2.42%) and the 30Yr (2.61%) yields have bounced. The support at 2.4% (10Yr) and 2.55% (30Yr) seems to be holding well. Need to see if a strong follow-through rise is happening from here to negate the danger of getting a deeper fall to 2.2% (10Yr) and 2.35% (30Yr). Still wait and watch.

The 10Yr GoI (6.9741%) has risen from just above the support at 6.95%. We retain the view of the 10Yr breaking above 7% and rising to 7.05% in the coming days while it holds above 6.95%.

The 5Yr GoI (6.9886) is stable below 7%. Support at 6.97% is holding well. While above this support the 5Yr can break 7% and rise to 7.1%.

Dow Jones and Nikkei have risen well and looks bullish to target further upside from here. DAX has bounced back but needs to rise past 18400 to avoid the danger of falling towards 18000-17700. Nifty bounced back well from its key support. This keeps our bullish view intact to see a rise towards 23800-24000. Shanghai trades lower below 3000 and looks likely to fall more from here.

Dow (39411.21, +0.67%) has surged above 39200. This has opened the doors to see 40000-40100 on the upside. 39000 will now act as a good support.

DAX (18325.58, +0.89%) is moving up. A strong rise above 18400 will be bullish to see 18800. That will avoid the danger of falling back to 18000-17700.

Nifty (23537.85, +0.16%) has risen back well from 23350. This keeps the bullish view intact of seeing 23800-24000 on the upside. A break below 23350 will only bring the Nifty under pressure for a fall to 23000-22800.

Nikkei (39030.50, +0.50%) has moved up to 39000 in line with expectations. A test of 39300 on the upside looks possible. Thereafter a break above it is needed to open the doors towards 40000. Else it may trade within 39300-38000 for some time.

Shanghai (2964.88, +0.06%) trades below 3000. A dip towards 2950-2930-2900 looks possible while below 3000.

Crude prices have bounced back keeping the overall bullish view intact. Gold, Silver and Copper looks vulnerable. Natural gas can fall back if the resistance at 2.95/3.00 holds.

Brent ($ 85.93) has bounced back as the support at $ 85 held well. While above $ 85, a rise towards $ 87.50-90.00 is possible in the coming sessions.

WTI ($ 81.58) has sustained above $ 80 and has moved up towards $ 82. A rise towards $ 84-85 looks possible while above $ 80.

Gold (2335.90) is stuck between 2350-2330. A fall towards 2300 is possible while below the resistance at 2370-2400. The range of 2400-2300 will persist for a few more sessions.

Silver (29.31) remains subdued. It can fall towards 29.00-28.80/70. Thereafter if it breaks below 28.80/70, then it would be vulnerable to a fall towards 27.

Copper (4.4155) is hovering above the lower end of the 4.6-4.4 range. It looks vulnerable to break below 4.4 and fall deeper towards 4.24/4.20.

Natural Gas (2.9220) has risen towards 2.95. If 2.95-3.00 holds, it can fall back towards 2.8-2.7.

12:30 18:00 CA Inflation Y/Y
Expn – … Expected – … Previous 2.7%

13:00 18:30 US Case Schiller
Expn 7.0% … Expected 7.0% … Previous 7.4%

14:00 19:30 US Cons Conf
Expn 103.7 … Expected 100.2 … Previous 102.0

Data Yesterday
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8:00 13:30 GER IFO Business Climate
Expn 88.9 … Expected 89.7 … Previous 89.3 …Actual 88.6

8:00 13:30 GER IFO Business Situations
Expn 87.0 … Expected 88..4 … Previous 88.3 …Actual 88.3

8:00 13:30 GER IFO Business Expectations
Expn 88.9 … Expected 91.0 … Previous 90.3 …Actual 90.3