FED cut a 25 bps rate cut which was widely expected but the comment that they would go slowly on future rate cuts next year given a stable labor market and inflation led to Dollar strength contrary to our expectations. The Dollar Index tested 108.26 before declining a bit from there while Euro came down significantly but has immediate support around 1.0330-1.0300 region above which a rise can be expected soon. EURINR had slipped below 88 but is back within its range of 90-88. Aussie has slipped below 0.63 but while it sustains above 0.62 it has a scope to rise back towards previous levels. The Pound is trading lower within its range of 1.28-1.25. USDCNY continues to rise further and remains bullish towards 7.30-7.35 while above 7.28/25. USDJPY has risen past 155, while EURJPY seems to be holding well below 163. USDJPY if sustained above 155, can head towards 157. On the other hand, the outlook appears bearish on EURJPY while below 163. USDINR, yesterday tested 84.9575 in the onshore markets. It might open around 85 today as the Spot on NDF is also trading higher. Thereafter whether the level of 85 holds or not will have to be seen. Watch out for US Philifed Index, US Existing Home Sales and US GDP data release scheduled today.

FED lowered the policy rate by 25 bps to the target range of 4.25%- 4.50% (from earlier 4.75%). Dollar Index (108.035) rose sharply to the high of 108.26 as the FED said they would go slow on future rate cuts next year given a stable labor market and inflation. Now, price action around 108 would be important to see whether it holds or not. Only a sustained trade above 108 can make the outlook further bullish in the near term. Else, it can fall back towards 107 and lower in the coming sessions capping the near term upside.

EURUSD (1.0374) slipped much below our expected downside limit of 1.04 as the Dollar rallied post-FOMC. Near-term support is coming around the 1.0330-1.0300 region, which can hold and produce a bounce back towards 1.0400-1.0450 in the coming sessions.

EURINR (88.2386) came down sharply to the low of 87.96 before rising back from there. Currently, it looks stable above 88 and if sustained, can rise higher towards the resistance around 89.00-89.50 region. For the medium term, a break on either side of 90-88 will be needed for further directional clarity.

Dollar-Yen (155.15) rose along with the Dollar Index, breaking past 155 even as the BOJ kept the rates unchanged at 0.25% today. If the pair sustains above 155, it can extend the rise towards 156-157 in the coming sessions. Else, failure to do so can bring it lower to 152 as mentioned earlier. We will have to wait and watch for now to see how the pair moves further.

EURJPY (161.05) tested 159.86 in line with our view of seeing a fall towards 160, before rising back. The upside looks capped at 162-163 for now. Overall, the view remains bearish below 163.

USDCNY (7.2974) has almost risen to our initial target of 7.30. It is to be seen if the rise extends to 7.35 or gets halted around 7.30 for the time being. Overall, while the immediate support at 7.28 and lower at 7.25 holds, view remains bullish towards 7.35 in the near term.

Aussie (0.6231) was expected to have limited downside to 0.63 but it slipped below it to the low of 0.6199 before recovering a bit from there. At the moment the path ahead looks a bit uncertain for Aussie but while it holds above 0.62, there could be some scope to see a rise back towards previous levels.

Pound (1.2589) came down significantly on Dollar strength and is currently trading near the lower end of its range of 1.28-1.25. A decisive break on either side will be needed for further clarity. Until then the range can persist for a while.

USDINR (85.0150) closed at 84.9575 yesterday on the onshore markets as anticipated. On the NDF it is currently trading at 85 on Euro weakness and Dollar strength. So on the onshore opening today, we might see a gap up opening around 85 level. Thereafter, whether the resistance near 85 holds or not is uncertain for now. Watch price action closely at 85.

The US Treasury yields have surged after the Fed meeting outcome last night. The yields are now hovering around a key resistance. A strong follow-through rise above it can take them further higher. Else they can fall back. We will have to wait and watch. There was a 25-bps rate cut from the Fed as expected. However, the trigger for the rise for the yields came from the economic projections. The Fed has kept the doors open for a 50-bps rate cut in 2025. This is down from its earlier projection for a 100-bps rate cut. Also, the US PCE, Fed’s inflation gauge has been revised higher to be at 2.5% in 2025, up from 2.1% projected earlier. The German yields sustain higher. Outlook is bullish and more rise is on the cards. The 10Yr GoI can rise in the near-term and then reverse lower after testing their resistance.

The US 10Yr (4.50%) and 30Yr (4.67%) yields have surged to 4.5% and 4.7% respectively much faster than expected. The price action in the next few days will need a watch. A strong follow-through rise above 4.5% (10Yr) and 4.7% (30Yr) will be bullish to see 4.8% (10Yr) and 5% (30Yr). Else there are chances to see a fall back to 4.2%-4.1% (10Yr) and 4.4%-4.3% (30Yr). We will have to wait and watch.

The German 10Yr (2.24%) and the 30Yr (2.47%) yields have inched up slightly. View remains bullish for a rise to 2.4%-2.45% (10Yr) and 2.6% (30Yr).

The 10Yr GoI (6.7861%) has dipped slightly. The near-term view is positive to see a rise to 6.8%-6.83%. But thereafter the yields can turn down which will keep the chances alive for seeing 6.7%-6.65% on the downside.

The Dow Jones plunged below 42,500 following the Fed’s rate cut announcement, with signals that future reductions in the federal funds rate will likely be limited. Watch price action near 42100, a break below which can be further bearish for the Dow. DAX closed flat, holding above 20,200. A decline toward 20,000-19900 is expected before resuming its upward trajectory toward 20,700-21,000 eventually. Nifty slipped below 24,300, but the critical support at 24,150 remains intact for now. However, bearish cues from global markets may weigh on Nifty. A breach of 24,150 could extend the decline to 24,000-23,800. Nikkei dropped below 39,000, reaching a low of 38,355.52 before a recovery. Below 39,000, a further fall to 38,000 remains likely. Shanghai fell to 3,346 before rebounding slightly, but the overall outlook remains bearish below 3,400, targeting 3,300.

The Dow (42326.87, -2.58%) has tumbled below 43000. Next key level to watch is 42100. Failure to bounce from there can drag the Dow Jones to 41500-41300 where the fall can halt.

DAX (20242.57, -0.02%) hovers around 20200. But on the charts, it looks vulnerable for a fall to 20000-19900 now. As mentioned yesterday, on the daily chart there is turn-around visible.

Nifty (24198.85, -0.56%) fell to test 24150 and is managing to hold above it. A fall below 24150 today on the back of the sell-off in the US markets can drag the Nifty down to 24000-23800. GIFT Nifty Futures (23,926), up 30 points, is trading in green. Need to wait and watch how the market opens.

Nikkei (38708.33, -0.96%) remains below the critical 39,000 level. The bearish view toward 38,000 is intact while it stays below 39,000. Conversely, a sustained rise above 39,000 could negate the bearish bias and shift momentum toward the upside.

Shanghai (3357.6386, -0.73%) recovered from a low of 3,346 to current levels. Further upside looks limited to 3,400-3450 for the near term. While below 3400 a fall towards 3300 is likely. A break below 3350 is required to accelerate a fall towards 3300. However, a sustained break above 3,400 is essential to avoid further downside

Crude prices may remain ranged between 76-71 (Brent) and 72-67 (WTI) for some more time. Gold, Silver and Copper have plunged sharply after the FED rate cut of 25bp. While the immediate support levels hold, a bounce back towards 2650-2700, 30.5-31.0 and 4.15-4.20 respectively can take place in the near term. Natural Gas can test 3.6 in the upcoming sessions.

Brent ($ 73.30) is holding above $ 73. The broad range of $ 76-71 can hold for the rest of the month.

WTI ($ 69.65) traded above $ 69 yesterday. A broad range of $ 72-67 can hold for some time.

Gold ($ 2624) plunged to a low of $ 2598 after Fed cut rates by 25bps yesterday but has managed to rise back above $ 2600 now. While the immediate support at $ 2600 holds, a bounce back towards $ 2650-2700 can take place in the near term.

Silver ($ 29.94) fell sharply to the interim support near $ 29.75 yesterday. While this support holds, a bounce back to 30.5-31.0 looks likely in the upcoming sessions.

Copper (4.1080) declined to a low of 4.08 yesterday. Immediate support can be seen near current levels above which a rise to 4.15-4.20 looks likely in the coming sessions.

Natural Gas (3.4120) continues to move up and can target 3.5-3.6 in the near term. A range of 3.6-3.1/3.0 can hold for some time.

3:00 08:30 BOJ Meeting
… Exp – … Expected 0.3% … Previous 0.25% …Actual 0.25%

11:00 16:30 BOE Mtg
… Exp – … Expected 4.8% … Previous 4.75%

11:00 16:30 UK BOE Minutes
… Exp – … Expected 0-2-7 … Previous 0-8-1

13:30 19:00 US Philifed Index
… Exp -3.5 … Expected 2.5 … Previous -5.5

13:30 19:00 US GDP
… Exp – … Expected 2.8% … Previous 2.8%

15:00 20:30 US Existing Home Sales
… Exp 3894K … Expected 4110K … Previous 3960K

14:00 02:30 US TICS (Net foreign purch of long-term Sec)
… Exp – … Expected – … Previous 216.1

DATA ON YESTERDAY:-
—————
7:00 12:30 UK CPI Y/Y
… Exp 2.3% … Expected 2.6% … Previous 2.3% …Actual 2.6%

10:00 15:30 EU CPI (YoY)
… Exp 2.3% … Expected 2.3% … Previous 2.0% …Actual 2.2%

13:30 19:00 US Housing Starts
… Exp 1342K … Expected 1350K … Previous 1312K …Actual 1289K

13:30 19:00 US Current Account Balance
… Exp – … Expected -286.0 … Previous -275.0 …Actual -310.9

18:00 23:30 US FOMC Meeting
… Exp <4.50% ... Expected <4.50% ... Previous <4.75%