Dovish comments from the FED officials signaled a higher rate cut possibility in September thereby taking the Dollar Index sharply down below 102. Powell’s Jackson Hole speech on Friday will be important to watch. The view is bearish towards 101 while below 102. Euro could be headed towards 1.11 or slightly higher. A lower EU CPI data release, if seen today can make the Euro stronger. The USDJPY and EURJPY tested 145.18 and 160.42 before bouncing back. Overall some corrective upmove is possible in the near term towards 150/152 and 164/165 within an overall downtrend. The Pound and Aussie are headed towards resistances at 0.6775/0.6850 and 1.30/3050 respectively from where a decline is possible. USDCNY can remain volatile within a region of 7.18-7.12. EURINR is likely to fall back towards 92-91.50 in the coming sessions while below resistance at 93. USDINR may attempt to dip to 83.85/80 or slightly lower on weakness in the Dollar. Thereafter, it may attempt to rise back towards 83.90/84.00.

Dollar Index (101.907) fell sharply breaking below our expected support near 102 after dovish comments from the FED officials, increasing a Sep-rate cut possibility. While below 102, the index may continue to decline towards 101.50-101 in the coming sessions unless an immediate bounce back is seen. View is bearish below 102.

EURUSD (1.1075) has moved up sharply on Dollar weakness and may enter the 1.11/1.12 zone from where a dip can be expected soon. Watch EU CPI data release today. A lower CPI can trigger a further rise in the Euro towards 1.11 or higher.

Dollar-Yen (146.83) tested 145.18 and EURJPY (162.62) tested 160.424 yesterday, falling sharply in line with our expectation but have managed to bounce back well. Note that 145 and 160-158 continue to remain as immediate support levels above which a corrective rise towards 150/152 and 164/165 can be possible.

The USDCNY (7.1457) also fell sharply on Dollar weakness. It has bounced from 7.1318 seen yesterday but may have fair scope to fall towards 7.12. A broad range of 7.12-7.18 can hold for a few sessions while the pair may remain volatile for the week.

Aussie (0.6719) tested 0.6738 and could be nearing resistance near 0.6775 and further up at 0.6850 which are crucial levels from where a decline looks possible back to 0.67.

Pound (1.2978) is also nearing resistance near 1.30-1.3050 region from where a decline can be possible towards 1.29/28 in the medium term.

USDINR (83.8750) may see a dip to 83.85/80 or slightly lower on continued weakness in the Dollar and a stronger Euro and Yuan. Thereafter, it may attempt to rise back to 83.90-84.00 in the medium term.

EURINR (92.8938) is headed to resistance at 93 from where a dip can be possible towards 92/91.

The US Treasury yields are coming down in line with our expectation. A break below their immediate support can drag them lower in the coming days. In case the support holds, a consolidation is possible before the downtrend resumes. The German yields remain stable. The view is bearish and there is room for the yields to fall more. The 10Yr GoI is still stuck in a narrow range. The bias is bearish to break the range and fall more eventually.

The US 10Yr (3.87%) and the 30Yr (4.12%) yields have come close to 3.85% (10Yr) and 4.1% (30Yr) in line with our expectation. A break below these levels can drag them down to 3.5% (10Yr) and 3.8% (30Yr). Resistances are at 4% (10Yr) and 4.3% (30Yr).

The German 10Yr (2.24%) and the 30Yr (2.46%) yields remain lower and stable. While below 2.4% (10Yr) and 2.6% (30Yr), the broader trend is down, and the yields can fall to 2% (10Yr) and 2.2% (30Yr).

The 10Yr GoI (6.8653%) remains stuck inside the 6.85%-6.9% range. The view remains bearish to break below 6.85% and a fall to 6.8%-6.75%. The upside can be capped at 6.92% if a break above 6.9% is seen.

Dow Jones has entered into the crucial resistance zone. Need to see if it break above it or fallback from there. DAX and Nifty remains bullish for the near term. Nikkei is attempting to break above its resistance and a sustained break above it could be further bullish in the near term. Shanghai has fallen back as the resistance at 2900 held well.

Dow (40896.53, +0.58%) has come up towards the crucial 40900-41000 resistance zone. A decisive break above 41000 is needed to go up to 42000. Else, the Dow can fall back to 40500-40400.

DAX (18421.69, +0.54%) remains bullish for a rise to 18600-18700. The price action thereafter will need a watch to see if the rise is extending to 19000 or the index is falling back towards 18400-18300.

Nifty (24572.65, +0.13%) is managing to hold above 24500. That keeps intact the bullish view of seeing a rise to 24700-25000.

Nikkei (38,262.50, +2.42%) is attempting to break above 38000-38300. A sustained break above these, if seen, can target 40000 in the near term.

Shanghai (2869.05, -0.84%) has fallen back sharply failing to rise past the resistance at 2900. While below 2900, the chances of seeing a fall towards 2800 will remain intact.

Crude prices remain bearish but have crucial support coming up, which if holds, can produce a bounce back in the medium term. Gold and Copper have scope to test 2600 and 4.25-4.27 on the upside before a fallback can be seen. Silver looks bullish towards 30-31. Natural gas has recovered sharply as it seems to be getting good support at 2.1 and while above it, a further rise can be seen towards 2.5 in the near term.

Brent ($ 77.36) has declined below $ 78 and seen a low of $ 77.28 so far. It can fall further towards $ 76 from here. Crucial, long-term Support at $ 75. While $ 75 holds as Support, a bounce back up towards $ 80-85 can be seen.

WTI ($ 73.34) has fallen towards $ 73 and might come down further to $ 72-71. The level of $ 71-70 is a crucial support zone which may hold and produce a bounce back towards $ 78-80.

Gold (2546.40) struggles to rise past 2550 but chances of rise towards 2600 remain intact. After that a fallback might be seen towards 2550-2500.

Silver (29.43) has seen a rise to 29.56 so far. A further rise towards 30-31 looks possible.

Copper (4.1790) has moved up towards 4.20. A test of 4.25-4.27 can be seen on the upside. While that holds, a fall back towards 4.1 might be seen.

Natural Gas (2.2430) has bounced back from a low of 2.0970. It seems to be getting support at 2.10. While above 2.10, a rise towards 2.4-2.5 can be seen. So, the fall to 2.0-1.9 that we had mentioned yesterday has negated now.

9:00 14:30 EU CPI (YoY)
Expn 2.1% … Expected 2.6% … Previous 2.6%

12:30 18:00 CA Inflation Y/Y
Expn – … Expected 2.8% … Previous 2.7%

Data Yesterday
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No major data released Yesday