Weaker New Home Sales data and strengthening of Yen led Dollar Index to fall and failure to rise past 104.50 can extend the fall further to 104-103.50. EURUSD has support at 1.0810-1.0800 which might be tested before a bounce back can be seen from there. USDJPY and EURJPY are headed down towards 152 and 165-164.50 respectively. USDCNY has reversed from the high of 7.2773 but may find support at 7.26-7.25. A broad range of 7.28-7.25 is likely to persist for a while. The Aussie and Pound continues to fall further as expected and can soon test 0.6500 and 1.28 on the downside. USDINR can fall back if the resistance at 83.75/80 holds. EURINR needs to rise past 91, else it is likely to fall towards 90.50. Watch out for the US GDP data release scheduled today.

Dollar Index (104.269) slipped yesterday as the new home sales data came lower than the market expectations at 617k (643k), also the Yen strengthened ahead of the policy meet scheduled on 31-Jul. A strong break above 104.50 will be needed to make the outlook bullish further, else Index could be vulnerable to test 104-103.50 on the downside. Watchout for US GDP scheduled today for further directional clarity.

EURUSD (1.0839) yesterday observed a high of 1.0863, led by the Dollar weakness before coming down. It can test the support at 1.0810-1.0800 before it attempts to rise back towards 1.0850-1.0900.

Dollar-Yen (152.33) and EURJPY (165.12) is falling in line with our bearish view as short-yen carry trades were unwinding ahead of next week’s Bank of Japan meeting. Soon the pairs can test 152 and 165-164.50. Thereafter if the support holds, a bounce back towards 156-158 and 168-170 could be seen in the medium term.

USDCNY (7.2606)  was expected to test 7.28 on the upside but instead it reversed from the high of 7.2773 itself. Currently it is trading near the immediate support around current levels which if held, a narrow range of 7.28-7.26 and a broad range of 7.28-7.25 is likely to persist for a while.

Aussie (0.6551) and Pound (1.2893) are also coming off as expected and are likely to extend the fall further towards 0.6500 and 1.28 respectively in the near term.

USDINR (83.7225) has been holding well below our mentioned resistance at 83.75, below which a fall towards 83.60/50 could be seen. Any break above 83.75, if seen, would extend the rise to 83.80 and then fall back from there. We are not looking for a rise above 83.80 just now.

EURINR (90.78) yesterday observed a low of 90.61 before recovering from there. Unless a decisive break past 91 is seen, the chances of it falling towards 90.50 cannot be fully ruled out. Thereafter we need to see if 90.50 acts as a support and pushes the pair back towards 91 or it falls further towards 90.

The US Treasury yields have risen further at the far end while at the near-end, the 2Yr has declined sharply. The bounce from the support on the far-end yields is sustaining well and they can move up further. The 2Yr has limited room to fall from here. It has a strong support coming up from where it can also rise back. The German yields continue to move up in line with our expectation. The bullish view is intact, and the yields can rise further in the coming days. The 10Yr and 5Yr GoI remain vulnerable to fall more from here.

The US 10Yr (4.25%) and the 30Yr (4.48%) yields are higher but stable while the 2Yr (4.45%) has come down sharply from around 4.52%. The 10Yr and 30Yr can rise to 4.3%-4.35% (10Yr) and 4.5%-4.55% (30Yr) respectively. The 2Yr has limited room to fall from here to 4.4%-4.38%. Thereafter it can also rise back.

The German 10Yr (2.43%) and the 30Yr (2.63%) yields have come down sharply. 2.4% (10Yr) and 2.6% (30Yr) are key supports while above which the bullish view of seeing a rise to 2.8% (10Yr) and 3% (30Yr) will remain intact.

The 10Yr GoI (6.9695%) settled stable after a volatile session. View remains bearish to see 6.94% and 6.9% on the downside.

The 5Yr GoI (6.9094%) has dipped again. View remains bearish to break 6.9% and fall to 6.8%. An intermediate bounce to 6.94%-6.96% cannot be ruled out before that fall.

Equities have fallen sharply on disappointing Tesla and Google earnings. Dow Jones, Nikkei and Shanghai have broken below the support at 40200, 39000/38000 and 2900 and might fall further towards 39500, 37000/36000 and 2850/2800 respectively from here. Nifty can fall to 24200-24100 following the sell-off in the global markets.

Dow (39853.87, -1.25%) has declined sharply below 40200 as expected. A break below 39800 can drag it down to 39500.

DAX (18387.46, -0.92%) has come down again. Failure to rise back immediately can take it down to 18200. That in turn will delay the rise to 18600-18800.

Nifty (24,413.50, -0.27%) can fall to 24200-24100 following the sell-off in the global markets. Need to see if it is bouncing back after that or now. A sustained rise above 24500 is needed to strengthen the bullish case again.

Nikkei (37947.00, -3.01%) has tumbled, breaking below the support at 39000-38000. While the break sustains, a further fall towards 37000-36000 could be seen.

Shanghai (2879.84, -0.76%) has broken below 2900. A fall towards 2850-2800 looks likely in the near term.

Crude prices remains bearish for a fall towards their key support before a bounce back can happen. Gold and Silver have fallen back towards 2360 and 28.30 and looks vulnerable to fall more from there. Copper can fall towards 3.8 before a bounce back can be seen from there. Natural gas has recovered a bit and has scope to rise towards 2.4-2.5 in the near term.

Brent ($ 81.07) and WTI ($ 76.95) remains subdued and can fall towards $ 78 (Brent) and $ 75-74 (WTI) respectively before a bounce back can be seen towards $ 83 and $ 80.

Gold (2375.40) rose to a high of 2433 yesterday before falling back sharply below 2380 from there. The mentioned resistance at 2430 has held well. It looks bearish for a break below 2360 and fall towards 2350-2320.

Silver (28.35) has fallen sharply towards 28.30 as expected after testing a high of 29.63. It looks vulnerable to break below 28.30 and fall towards 27.

Copper (4.0615) is heading down towards 4.0 as expected. It may fall further towards 3.8 before a bounce back can happen towards 4.0-4.1.

Natural Gas (2.1710) has recovered from a low of 2.1020. View remains intact to see a rise towards 2.4-2.5 in the near term while it stays above 2.0.

8:00 13:30 GER IFO Business Climate
Expn 88.1 …Expected 88.9 …Previous 88.6

8:00 13:30 GER IFO Business Situations
Expn 87.0 …Expected 88.5 …Previous 88.3

8:00 13:30 GER IFO Business Expectations
Expn 88.1 …Expected 89.0 …Previous 89.0

12:30 18:00 US Durable Goods Orders
Expn 1.2% …Expected 0.4% …Previous 0.1%

12:30 18:00 US GDP
Expn – …Expected 1.9% …Previous 1.4%

Data Yesterday
…………..

14:00 19:30 US New Home Sales
Expn 586K …Expected 643K …Previous 621K …Actual 617K

14:00 19:30 BOC Meeting
Expn – …Expected 4.50% …Previous 4.75%