The Monday sell-off in currency pairs continue today as well but there is some signal of mild recovery. Dollar Index, USDJPY, EURJPY and USDCNY fell sharply to the low of 102.16, 141.688, 154.41 and 7.1160 respectively before recovering from there. US Trade balance is scheduled today. Euro tested 1.10089 before coming off. Aussie is currently back within 0.64-0.66 range after falling to the low of 0.6348. Pound is above immediate support near 1.27 and can attempt to move up further. USDINR is currently trading higher (83.93/94) on the off-shore markets and even rose past 84 yesterday. Note 83.90-84 is a crucial resistance zone for the pair. It needs to be seen if RBI intervenes today to keep the pair below 84. EURINR needs to sustain above 92 to head towards 93 in the near term else can fall back to 91-90. RBA policy meeting is scheduled today.

Dollar Index (102.80) observed a low of 102.16 yesterday before recovering from there. We believe markets now fully anticipate a rate cut from the FED, and the fear of a recession is driving the idea of stimulus monetary policy. While the support at 102 holds, we are retaining our view of the Index rising back higher towards 104-105 in the coming sessions.

EURUSD (1.0954) surged significantly past our mentioned resistance at 1.0950 but could not sustain and has declined from the high of 1.10089. A clear and decisive break above 1.10 is needed to become highly bullish towards 1.11/12 or higher. Else it may face rejections at 1.10 /11 and fall back towards 1.0900-1.0850.

Dollar-Yen (145.21) and EURJPY (159.09) tested the low of 141.688 and 154.41 respectively before recovering from there. For now, we expect the downside to be limited to 140 and 155 respectively while the pairs can rise slowly from current levels.

USDCNY (7.1510) seems to be rising well after the yesterday’s fall to the level of 7.1160. The pair if sustained above the support around 7.12/11, can rise back towards 7.20 soon. The pair needs to necessarily break below 7.10 to become bearish in the medium term.

Pound (1.2783) can attempt to rise back towards 1.29-1.30 in the near term while above 1.27. Only a decisive break below 1.2750/2700 if seen, can bring 1.26 back into the picture.

Aussie (0.6516) had slipped below the range of 0.64-0.66 to a low of 0.6348 but is currently back within the range. Watch for RBA policy statement today.

USDINR (83.85) rose to the level of 83.8550 yesterday despite the Dollar weakness. On the NDF it surged past 84 yesterday after the onshore markets closed. Today we will have to see whether RBI intervenes to sell Dollars and keep USDINR below 84 or not. Note 83.90-84 is a key resistance region in the very near term.

EURINR (91.988) indeed sustained above 91.50 to test 92.5634 before it started coming off from there. Going ahead, if the pair rises and sustains above 92; it can move up to 93 on the upside before topping out. Failure to do so can drag it lower towards 90 in the near term.

The US Treasury yields have bounced back. While this sustains, a corrective rise is possible before the downtrend resumes. The German yields remain lower. The view is bearish and more fall can be seen going forward. The 10Yr and 5Yr GoI are coming down as expected. The downtrend is intact and there is room to fall further from here.

The US 10Yr (3.83%) and the 30Yr (4.10%) yields have bounced back. While this sustains a corrective rise to 4% (10Yr) and 4.3% (30Yr) is possible before the fall resumes targeting 3.5% (10Yr) and 3.8% (30Yr) on the downside.

The German 10Yr (2.18%) and the 30Yr (2.40%) yields remain lower and stable. The bearish view is intact to see 2% (10Yr) and 2.2% (30Yr).

The 10Yr GoI (6.8611%) and the 5Yr GoI (6.79%) continues to fall as expected and are keeping the bearish view intact. The 10Yr can fall to 6.8%-6.75% and the 5Yr to 6.7%.

Dow Jones and DAX continue to fall as the recent weaker than expected US economic data have sparked the fear of recession in the US. Nikkei has recovered sharply as the support at 31000 held well and might extend the recovery further. Nifty might rise back taking cues from the recovery in the Asian markets. Shanghai remain bearish.

Dow (38703.27, -2.60%) continues to fall and keeps intact our view of seeing 38200 on the downside. Resistance will now be in the 39200-39300 region.

DAX (17339, -1.82%) is heading down towards 17000-16800 as expected. A corrective bounce to 17500-17700 is a possibility before the above-mentioned fall happens.

Nifty (24,055.60, -2.68%) can rise back to 24250 taking cues from the recovery in the Asian markets. An extended rise to 24500 is also a possibility. The price action thereafter is going to be very crucial to see if the Nifty is turning down again or not.

Nikkei (34253.72, +8.89%) indeed fall and tested 31156.12 in line with expectations for a fall towards 31000 and has recovered sharply from there. While above 31000, a rise towards 36000-38000 might be seen.

Shanghai (2861.88, +0.04%) remains lower. View remains bearish for a fall towards 2850-2800 in the near term.

Crude prices have tested their respective support levels and can bounce back towards $ 75 (WTI) and $ 80 (Brent). Gold might trade within 2400-2500. Silver and Copper can test their key support on the downside and then a bounce back might be seen. Natural Gas remains lower but is likely to get support at 1.9 and might bounce back from there.

Brent ($ 77.40) tested the support $ 75.05 before bouncing back slightly from there. While the support at $ 75 holds, Brent can bounce back towards $ 80.

WTI ($ 73.41) tested $ 70.90 yesterday before bouncing back to levels above $ 73. While it holds above $ 71, it can rise towards $ 75-76 in the near term.

Gold (2455.60) fell sharply to 2404 yesterday before bouncing back a bit from there. If it remains above 2400, a trade between 2400-2500 might be seen for a while. The chances of rise towards 2550-2580/2600 may get delayed.

Silver (27.51) fell sharply to 26.60 yesterday and has bounced slightly from there contrary to our view to see a rise past 29.50 and move up towards 30-31. It may come down further to test 26. After that a bounce back might be seen towards 28.

Copper (4.0155) fell to 3.9305 yesterday and has risen back a bit from there. It may come down further to 3.85-3.80 and then a bounce back towards 4.2-4.3 could be seen.

Natural Gas (1.9660) remains lower. Key support at 1.9 can hold and produce a bounce back towards 2.2 or even higher to 2.5.

4:30 10:00 RBA Meeting
Expn – …Expected 4.4% …Previous 4.4%

9:00 14:30 EU Retail Sales
Expn 0.3% …Expected -0.2% …Previous 0.1%

12:30 18:00 US Trade Balance
Expn 0.0 …Expected -72.5 …Previous -75.1

Data Yesterday
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5:00 10:30 IN Services PMI
Expn 62.3 …Expected – …Previous 60.5 …Actual 60.3