Lower US CPI and possible BoJ intervention last week kept Dollar Index low against major currencies, testing 104.04 on the downside while Aussie, Pound, Euro, Yuan all strengthened to test crucial levels of 0.68, 1.30, 1.09 and 7.2480 from where they have recovered a bit today. If the Dollar Index bounces higher while above 104, the currencies may weaken in the near term as the mentioned crucial levels may hold. USDJPY and EURJPY have declined sharply but it is to be seen if the fall continues to hold in the near term. USDINR can continue to trade between 83.35-83.65 with a possible dip today on a stronger Euro while EURINR must fall below 91 again to prevent any further rise towards 91.50/92. Watch price action around 91.

Dollar Index (104.232) continued its fall on Friday as well, testing 104.041 on the downside. It is likely to recover a bit while above 104 and attempt to rise towards 104.50-105 in the next few sessions.

EURUSD (1.0891) tested 1.0911 last week before seeing slight dip today. While below 1.09,it can continue to fall within our earlier range of 1.09-1.07. Above 1.09, a maximum extension to 1.0950/60 could be possible in case the Euro rallies in the near future.

BOJ’s data suggested that authorities may have spent up to 3.57 trillion yen ($ 22.4 billion) on Friday which has led Dollar-Yen (157.95) and EURJPY (172.02) to fall significantly on Friday, continuing the fall seen on Thursday after the lower US CPI release. Both the pairs are currently headed towards immediate supports at 157-156 and 171/170.50 respectively. Thereafter, if the supports hold, both pairs can attempt to rise back towards earlier levels of 161/162 and 175/176 respectively. Only a decisive break below the mentioned supports would indicate further bearishness in the near term.

USDCNY (7.2594) is finding it difficult to sustain above 7.26. Unless a sharp fall below 7.24 is seen, we are not ruling out the possibility of the pair rising towards 7.27/28 again in the medium term. Overall, view remains bullish while above 1.24/250.

Aussie (0.6775) is facing rejection around 0.68 levels, while Pound (1.2972) is hovering below its resistance of 1.30. Aussie has some room on the charts to further test 0.6850 before topping out but whether it will happen or not will have to be seen. Overall, a range of 0.67-0.68/6850 (Aussie) and 1.28-1.30 (Pound) can persist for a while.

USDINR (83.5350) remained overall stable within a 20-paisa range of 83.40-83.60. We expect the volatility to remain subdued for this week as well. A revised range of 83.65-83.35 can hold for some time before it eventually starts rising higher towards 83.75 in the upcoming weeks. Stronger Euro could lead to slight Rupee strength today but may not be able to bring it below 83.40/35 on the downside.

EURINR (90.9763) on Friday tested a high of 91.1155 but could not sustain and declined from there. Watch price action closely to see if the pair rises past 91 or remains within 91-89 range in the coming days.

The US Treasury yields continue to fall. The chances are looking high for the yields to see an extended fall before reversing higher again. The German yields have bounced back. The view remains bullish. Supports can limit the downside and the yields can see a rise in the coming days. The 10Yr and 5Yr GoI remains vulnerable to fall while they remain below their resistances.

The US 10Yr (4.18%) and the 30Yr (4.40%) yields have declined further. The 10Yr is below 4.2% and while this sustains, a fall to 4.1% is possible. The 30Yr on the other hand can fall to 4.3% on a break below 4.4%.

The German 10Yr (2.49%) and the 30Yr (2.68%) yields have bounced back. The broader view remains bullish to see 2.8% (10Yr) and 3% (30Yr) on the upside. support at 2.4% (10Yr) and 2.6% (30Yr) can limit the downside.

The 10Yr GoI (6.9882%) can test 6.96%-6.95%. A break below 6.95% can drag it down to 6.9%. If it manages to sustain above 6.95% and bounces back, a rise to 7% can be seen.

The 5Yr GoI (6.9606%) remains lower. Our view of seeing a test of 6.95%-6.9% remains intact while below 6.97%. As mentioned earlier, a strong rise above 7% is needed to become bullish again.

Dow Jones indeed rose to test its key resistance before coming off a bit from there. A break above its resistance is needed for increased bullishness or else it can fall from here. DAX and Nifty have broken above their upper end of the range and looks bullish to target further upside. Shanghai has scope to rise towards 3000.

Dow (40000.90, +0.62%) surged to a high of 40257 and has come down from there. A strong follow-through rise above 40250 is needed to see 41000 and higher levels and avoid a fall back to 39500.

DAX (18748.18, +1.15%) has risen above 18600 as expected. This keeps our bullish view intact to see 19000-19200 on the upside.

Nifty (24502.15, +0.77%) has risen above 24450 as expected and can rise to 24700 and higher in line with our expectation.

Nikkei (41430.50, -2.00%) is closed today. But chances of rise towards 43000-44000 is still possible while it remains above 41000.

Shanghai (2967.33, -0.13%) is hovering below 2980. Chances of rise towards 3000 remains intact. Thereafter, a further break above 3000, if seen, could be bullish towards 3050 or higher.

Crude prices have fallen back failing to rise past their immediate resistance and might dip further from here. Gold lacks a follow through rise but still has scope to rise towards its key resistance while above 2380-2360. Silver can ranged between 30.50-32.00 for a while but bias is positive to see an eventual breakout on the upside of the range. Copper has recovered sharply and looks likely to rise towards 4.7. Natural gas continues to drift lower and has scope to target 2.1-2.0 in the near term.

Brent ($ 85.10) has fallen back below $ 85.50 after testing $ 86.35. Failure to rise past $ 86.00 can drag it further down to $ 84-83.

WTI ($ 81.10) has fallen back after failing to rise past $ 82. If it sustains below $ 82, a dip towards $ 80-79 could be seen.

Gold (2414.90) sustains above 2400 but lacks a strong follow through rise. It can rise towards the resistance at 2450-2460 as long as it holds above 2380-2360.

Silver (31.10) has fallen back failing to rise past 32. The 30.50-32.00 range remains intact. Bias is positive to see a break on the upside and rise towards 33.00 in the near term.

Copper (4.5945) has bounced back after testing a low of 4.4760. We had expected it to fall towards 4.4 and then bounce back from there. A rise towards 4.7 looks likely while above 4.4. After that, it may break above 4.7 and rise towards 4.8-5.0.

Natural Gas (2.2590) continues to dip and can test 2.1-2.0 on the downside before a bounce back towards 2.5 can be seen.

6:30 12:00 IN WPI
Expn 2.5% …Expected – …Previous 2.6%

9:00 14:30 EU Ind Prodn (MoM)
Expn -0.4% …Expected – …Previous -0.1%

Data Friday
…………..
12:00 17:30 IN IIP
Expn 3.1% …Expected 4.9% …Previous 5.0% …Actual 5.9%

12:00 17:30 IN CPI
Expn 4.80% …Expected 4.80% …Previous 4.75% …Actual 5.08%