The Dollar Index extended its fall to the support around 108.60 before rising back. While above 109.00-108.75, the view remains intact to see a rise towards 111. The Euro tested the resistance at 1.0350 before coming down. A fall to 1.0200-1.0150 can be seen while below 1.0400. EURINR continues to remain volatile within the 90-88 region. USDJPY has slipped below 156 but has immediate support around 155, above which there could be scope to see a rise back towards 158 in the near term. AUDUSD and Pound attempted to rise back but could not sustain. While below 0.6250 and 1.24/26, both appears bearish towards 0.61-0.60, 1.20 respectively in the near term. EURJPY is trading at the crucial level of 160, need to see whether it holds or not. Watch price action closely around current levels. USDCNY can gradually head towards 7.35. USDINR had slipped below 86.40. Further, if the fall continues, it can be limited to 86.30/20 max. Eventually, the pair is likely to head towards 86.70. Watch out for the US Retail Sales, US Philifed Index data release scheduled today.

Lower than the previous US Core CPI at 0.23% (0.31%) led Dollar Index (109.097) to fall towards the mentioned support around 108.60 region before rising back from there. While the rise is above the 109.00-108.75 region, the Index can reach 111 in the near term.

EURUSD (1.0288) tested the resistance around 1.0350 region as expected and started coming off. While below 1.0350-1.0400, a fall to 1.0200-1.0150 can happen in the near term.

EURINR (88.9261) yesterday witnessed a high of 89.4650 before coming down. The cross continues to remain volatile within 90-88 region. The range is likely to persist for a while until a decisive break on either side is seen.

Dollar-Yen (155.68) came down significantly after the comments from BOJ Governor stated that the central bank would raise interest rates if improvements in the economy and price conditions continue. Only a decisive break below 155 can make the outlook further bearish. Else while the support at 155 holds; the pair can still attempt to rise back towards 158. The targets of 160-162 are put on hold until further clarity.

EURJPY (160.12) had slipped slightly below 160 to the low of 159.74 but has recovered from there. The charts have enough room to test 157-156 on the downside but a decisive break below 160 will be needed for that. Price action around current levels would be important to watch to see whether 160 holds or not. Overall, the upside looks capped at 164.

USDCNY (7.3309) has continued to remain steady around the 7.33 region. Low volatility is making the pair uncertain at the moment, and it is delaying our targets as well. Still, we retain our view of an upside target of 7.35 and even 7.40 on a confirmed rise past 7.35.

Aussie (0.6219) and Pound (1.2226) had initially risen to the highs of 0.6246 and 1.2306 before declining to the current levels. While the resistances at 0.6250-0.6300 and 1.24/26 hold, a fall to 0.61-0.60 and 1.20 respectively cannot be ruled out. Overall, the view remains bearish.

USDINR (86.4060) slipped below 86.40 yesterday but on the NDF, it is trading around 86.40 region. Even if we witness a lower opening on onshore markets, the downside can be limited to 86.30/20 max. Eventually, the pair is likely to head towards 86.70.

The US Treasury yields have declined sharply after the inflation data release yesterday. Though inflation numbers were softer than market expectation, a comparison with previous releases indicates a mixed picture. The US Headline CPI is still hot while the Core CPI seems to be easing. The Headline CPI rose 2.9% in December, up from 2.73% in November. The Core CPI on the other hand eased to 3.25% in December from 3.3% a month ago. On the charts, the trend is up for the Treasury yields, they are likely to resume the upmove after some more fall from here. The German yields have come down below their resistance again. A further fall from here can drag them down and negate the rise mentioned yesterday. The 10Yr GoI tested its support and holding well above it. While above that support, the bias is positive to see a rise in the short-term.

The US 10Yr (4.66%) and 30Yr (4.88%) yields have declined sharply. The resistance at 4.8% (10Yr) and 5% (30Yr) has held well and the fall to 4.6% (10Yr), 4.8% (30Yr) is happening now, much faster though. That delays the rise to 5% (10Yr) and 5.2% (30Yr).

The German 10Yr (2.56%) and the 30Yr (2.78%) has come down below 2.6% (10Yr) and 2.8% (30Yr). A further fall from here will negate the rise to 2.8% (10Yr) and 3% (30Yr) mentioned yesterday. It will then drag the yields down to 2.4% (10Yr) and 2.6% (30Yr).

The 10Yr GoI (6.8136%) tested 6.8% and is holding above it. While above 6.8%, the bias is positive to see a rise to 6.9%.

The Dow Jones has climbed above 43,000 following the CPI data release, contrary to pur expectations. A sustained rise past 43,500 could push the index higher toward 44,000 and beyond. The DAX has surged above 20,500 and is poised to rise further toward 20,700, maybe even higher to 21,300-21,500. The Nifty has been stable, moving slightly higher. A rise toward 23,500 looks likely before the index experiences a pullback. The Nikkei, within its sideways range of 38,000-40,000, is expected to climb toward 39,000-40,000. The Shanghai has moved above 3,250. While it stays above this level, the index could target 3,300-3,350 in the near term.

The Dow (43221.55, +1.65%) has risen, breaking above 42700 contrary to our expectation. A strong rise above 43400 will take it up to 44000 and higher. That will negate the fall to 41500-41300 that we have been mentioning.

DAX (20574.68, +1.5%) has risen further and looks strong. A break above 20700 can take it up to 21300-21500.

Nifty (23,213.20, +0.16%) sustains higher but seems to lack strong follow-through buying. A rise to 23500 is possible. But at the same time, the danger of a fall to 22500 breaking below 23000 is still alive.

Nikkei (38551.91, +0.28%) has climbed above 38,500 and is likely to advance further toward 39,000 and 40,000. The overall outlook is for the index to approach the upper boundary of its sideways range of 38,000-40,000.

Shanghai (3,255.4500, +0.81%) has risen past 3,250. If it sustains above this level, a further rise toward 3,300-3,350 is possible. However, failure to hold above 3,250 could see the index retreat back into its range of 3,150-3,250.

Crude and Natural Gas remains bullish for the near term. The prices can target 84-86 (Brent), 82-84 (WTI) and 4.2-4.4 (Natural Gas) respectively. Gold, Silver and Copper have risen to their respective resistance levels. A sustained break above these levels could take the prices higher towards 2800-2850 (Gold), 33-34 (Silver) and 4.6-5.0 (Copper) respectively in the near term.

Brent ($ 82.21) and WTI ($ 80.26) have risen sharply in line with our expectations as US crude supplies tightens. A further rise towards 84-86 and 82-84 respectively can take place in the near term.

Gold ($ 2727.60) has risen to its immediate resistance at 2720. A break above this would pave way for higher levels of 2800-2850 in the upcoming weeks.

Silver (31.74) has bounced back sharply to 31.65 yesterday. Near term resistance is coming at 32, which needs to be broken to see higher levels of 33-34. Else can fall back to 31-30. Watch price action near 32.

Copper (4.4105) has inched up to its immediate resistance as anticipated. While the resistance holds a fall back to 4.3-4.2 can be seen in the coming sessions. Only a sustained break above 4.4 will pave way for higher levels of 4.6-5.0 in the upcoming weeks.

Natural Gas (4.06) continues to rise and can target mentioned levels of 4.2-4.4 in the upcoming weeks.

1:30 07:00 Australia Labour Force
… Exp – … Expected 14.5K … Previous 35.6K

7:00 12:30 UK Trade Bal
… Exp -16.0 … Expected -18.0 … Previous -19.0

10:00 15:30 EU Trade Bal
… Exp – … Expected 7.2 … Previous 6.8

13:30 19:00 US Retail Sales (MoM)
… Exp 1.2% … Expected 0.6% … Previous 0.9%

13:30 19:00 US Philifed Index
… Exp -1.6 … Expected -7.0 … Previous -16.4

DATA YESTERDAY:
————-
7:00 12:30 UK CPI Y/Y
… Exp 2.9% … Expected 2.6% … Previous 2.6% …Actual 2.5%

10:00 15:30 EU Ind Prodn (MoM)
… Exp 0.2% … Expected 0.3% … Previous 0.2% …Actual 0.2%

10:00 15:30 IN Trade bal
… Exp – … Expected – … Previous -32.8 …Actual -21.9

13:30 19:00 US CPI (MoM)
… Exp 0.2 … Expected 0.3 … Previous 0.3 …Actual 0.4

13:30 19:00 US Core CPI (MoM)
… Exp 0.3% … Expected 0.2% … Previous 0.3% …Actual 0.2%