The Dollar Index has been coming off sharply and a break below 101 can drag it towards 100.5-99.5 in the medium term. Euro has surged past 1.11 and can test 1.1150/75-1.12 before possibly topping out. The USDJPY and EURJPY can hold above 145 and 160/158 and move higher in the medium term. The Pound and Aussie have crucial 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 with a dip to 7.12. EURINR has surged past the mentioned resistance of 93 and a decisive break past 93.50 can take it higher towards 94 in the near term. USDINR tested 83.75 before rising back from there in line with our expectation. A confirmed break below 83.75 will be needed to bring 83.70/60 into the picture. Else, it may attempt to rise back towards 83.90/84.00.

Dollar Index (101.422) continued to fall yesterday as well. The tensions in the US elections with possible rising prospect of a Democratic victory in the presidential race might have supported an unwind of ‘Trump trades’. Now, a break below 101 if seen; can drag it further towards 100.5-99.5 in the near term. Watch out for US New Home sales data release today and Powell speech at the Jackson Hole on Friday.

The EU CPI came lower than expected at 2.57% YoY (2.60%, YoY). EURUSD (1.1121) has surged past 1.11 on continued weakness in the Dollar. A test to 1.1150 /1.12 could be seen before a dip can be expected.

Dollar-Yen (145.40) and EURJPY (161.70) seem to be holding above 145 and 160 respectively and while they can manage a bounce from here, a test of 150/152 and 164/165 in the medium term can be possible. Else, a break below 145 and 160 if seen can be bearish in the medium term. Overall long term view remains bearish.

The USDCNY (7.1319) has been trading lower in line with our bearish view. Going further it has a fair scope to fall towards 7.12. A broad range of 7.18-7.12 can hold for a few sessions while the pair may remain volatile for the week.

Aussie (0.6742) has interim resistance near 0.6775 and higher at 0.6850 from where a decline looks possible back to 0.67.

Pound (1.3025) tested 1.3052 on the upside before coming down. Unless a decisive break past 1.3050-1.31 is seen, a decline can be possible towards 1.29/28 in the medium term.

USDINR (83.7975) tested 83.75 yesterday before stabilizing above it. This was in line with our expectation of seeing an initial dip to 83.85/80 or slightly lower mentioned in yesterday’s edition. A decisive break below 83.75 is needed to become further bearish towards 83.70/60. Else USDINR can bounce back towards 83.90-84.00, giving a broad range of 83.75-84.00 for the near term. Watch price action near current levels.

EURINR (93.1766) has risen past our expected resistance at 93. A confirmed break past 93.50 if seen, can make it further bullish to 94 or higher in the near term. Else, it will be considered as a false break and if so, then our view of seeing a dip can be possible towards 92/91. Watch price action near 93-93.50 region.

The US Treasury yields have declined below their intermediate support. That keeps intact our bearish view. The yields can fall more from here. The German yields are also coming down inline with our expectation. The view remains bearish and there is room to fall further. The 10Yr GoI broke the range on the downside but did not sustain. The sideways range seems to remain intact. The bias is bearish to get a sustained break below the range and a fall going forward.

The US 10Yr (3.81%) and the 30Yr (4.06%) yields have declined below 3.85% and 4.1% respectively as expected. That keeps intact our bearish view of seeing 3.5% (10Yr) and 3.8% (30Yr) on the downside.

The German 10Yr (2.21%) and the 30Yr (2.43%) yields have dipped. The downtrend is intact, and the yields can fall to 2% (10Yr) and 2.2% (30Yr) while below 2.4% (10Yr) and 2.6% (30Yr).

The 10Yr GoI (6.8561%) broke below 6.85% but did not sustain. The 6.85%-6.9% range seems to remain intact. We remain bearish to see a break below 6.85% and a fall to 6.8%-6.75%.

Dow Jones and Nikkei have dipped as their respective resistances are holding and they might fall further from here. DAX has come down a bit but might get support at 18200 which will keep the near term bullish view intact. Nifty remains bullish for the near term. Shanghai has fallen further and can come down towards 2800.

The resistance at 40900-41000 is holding on the Dow (40834.97, -0.15%) . While below this resistance a dip to 40500-40400 can be seen in the next few days. Need to see if the Dow is reversing higher again after that or not.

DAX (18357.52, -0.35%) has come down but can get support at 18200. While above 18200, the near-term view is bullish to see 18600-18700 on the upside.

Nifty (24,698.85, +0.51%) risen towards 24700 as expected. View remains bullish to see 25000. A break above 24800 will clear the way for that. Supports are at 24500 and 24000.

Nikkei (37,838.00, -0.67%) has dipped, failing to break above 38000-38300. Only a decisive break above these, if seen, can target 40000 in the near term. Else it can fall further towards 37000-36500.

Shanghai (2857.16, -0.33%) has seen a low of 2848.15 so far. The resistance at 2900 continues to hold well. A further fall towards 2800 might be seen.

Crude prices continue to fall but have crucial support coming up, which if holds, can produce a bounce back in the medium term. Gold, Silver and Copper can fallback while they remain below 2600, 30.00 and 4.25-4.22. Natural gas appears range bound for the near term.

Brent ($ 76.97) continues to fall and has scope to dip towards $ 76. Crucial, long-term Support at $ 75. While $ 75 holds as Support, a bounce back up towards $ 80-85 can be seen.

WTI ($ 72.92) continues to fall and can come down towards $ 72-71. The level of $ 71-70 is a crucial support zone which may hold and produce a bounce back towards $ 78-80.

Gold (2557.20) is heading up towards crucial resistance at 2600. While that holds, a fallback towards 2550-2500 might be seen.

Silver (29.56) indeed tested 30.04 yesterday as expected and has come down a bit from there. It may fall towards 28.50-28.00 while it stays below 30.

Copper (4.1575) has fallen back after testing a high of 4.21. We had expected to see a test of 4.25-4.27. It may fall towards 4.1-4.0 while it remains below 4.25-4.22.

Natural Gas (2.20) has fallen back again from 2.2780. It appears ranged between 2.1-2.3. As long as it remains above 2.1, chances of seeing a rise towards 2.4-2.5 cannot be ruled out.

14:00 19:30 US New Home Sales
Expn 648K … Expected 628K … Previous 617K

Data Yesterday
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9:00 14:30 EU CPI (YoY)
Expn 2.7% … Expected 2.6% … Previous 2.5% …Actual 2.6%

12:30 18:00 CA Inflation Y/Y
Expn – … Expected 2.8% … Previous 2.7% …Actual 2.5%