China on Tuesday slapped tariffs on U.S. imports, which led to Dollar Index slipping below 108. Immediate support at 107.75, above which bias remains positive for a bounce back. Euro is headed towards the resistance at 1.04. EURINR is trading near the upper end of its broad range of 89/88-91. USDJPY has been coming off and while the fall continues, can get extended to 150 in the near term. EURJPY can have downside limited to 158/56 max. AUDUSD and Pound have immediate resistances coming at 0.6300 and 1.25/26 respectively. USDCNY is rising as anticipated and view appears bullish towards 7.30, while above 7.250/225. USDINR can move higher towards 87.50 in the near term. US ADP Employment and US Trade balance is scheduled today.

Dollar Index (107.888) slipped below 108 after the China yesterday slapped tariffs on U.S. imports and weaker-than-expected US JOLTS job openings release at 7.60Mln (8.01mln). Immediate support is around 107.75 region, need to see whether it holds, and index bounces back or slips below it, thereby initially targeting 107. For now, while the support holds bias remains positive for a bounce back but the targets of 110-111 are kept on hold until further clarity.

EURUSD (1.0383) is headed towards the mentioned resistance at 1.04. Thereafter, a decisive break past it will be needed to rise back towards 1.05 and higher in the near term. Failure to do so can make it vulnerable to fall back towards 1.03. Watch price action closely around current levels.

EURINR (90.4894) is nearing the upper end of its broad range of 89/88-91. Still a decisive break past it will be needed for further directional clarity. Until then, range can persist in the near term.

EURJPY (159.23) is coming off from the high of 160.312 since morning but overall downside can be limited to 158 or 156 max. Cross can eventually bounce back again, with initially targeting 162.50.

Dollar-Yen (153.39) fell from the high of 155.52 after the data showed Japan’s December inflation-adjusted real wages YoY% rose 0.6%. This led markets to speculate for more rate hikes from BOJ. While the fall continues, can get extended to 150 in the near term. Only a sustained rise past 156 can negate the anticipated fall.

USDCNY (7.2833) is rising as expected and has even tested our initial target of 7.28. While above 7.250-2.225, view appears bullish towards 7.30 in the near term.

Aussie (0.6223) and Pound (1.2479) are headed towards the immediate resistances coming at 0.6300 and 1.25/26 region respectively. While it holds, pairs can fall back again in the near term.

USDINR (87.1190) remained stable above 87 yesterday. The downside can be limited to 86.80-86.50 max. Overall, the pair is likely to head towards 87.50 in the near term.

The US Treasury yields are stuck inside a sideways range. There is limited room on the downside even if this range is broken on the downside. We expect the yields to see a rise eventually going forward. The German yields remain lower. Failure to rise back sharply from current levels can drag them further lower. The 10Yr GoI remains stable within the expected range. The sideways range can remain intact for some time before a bullish breakout happens.

The US 10Yr (4.52%) and 30Yr (4.76%) yields are stuck between 4.5%-4.6% and 4.7%-4.85% respectively. The downside is likely to be limited to 4.4% (10Yr) and 4.6% (30Yr). Eventually the yields can break above 4.6% (10Yr) and 4,85% (30Yr) and rise to 5% (10Yr) and 5.2% (30Yr) over the medium-term.

The German 10Yr (2.39%) and the 30Yr (2.64%) yields remain lower. While below 2.4%, the 10Yr can fall to 2.2%. The 30Yr on the other hand can fall to 2.4% on a break below 2.6%.

The 10Yr GoI (6.6732%) remained stable within the 6.6%-6.7250% range. The range can remain intact for some time and a dip within it is possible now. Eventually the yield can break the range on the upside and rise to 6.8%-6.85%.

The Dow Jones has moved up, likely to hold the range of 44000-45100. DAX has risen above 21500. A follow-through rise would take the index higher to 21900; else, it will come down to 21000-20800. Nifty rose above 23700 and could face the resistance at 23800-24000. A breach of this resistance will lead to a trend reversal, and the index could rise towards 24500 and higher. Else, it will come down to 23500-23000. The Nikkei yesterday itself lost the intraday gains and closed below 39000. Further, while below 39000, it could come down to 38500-38000. Shanghai trades below 3250. It has support at 3200-3150 and resistance near 3300-3330.

The Dow (44556.04, +0.30%) has moved up slightly. 44000-45100 is the range for now. A breakout on either side of this range will determine whether the Dow can rise to 45300-45500 or fall to 43500-43300.

DAX (21505.70, +0.36%) has bounced and we need to see if this sustains. Failure to get a strong follow-through rise from here will keep it vulnerable for a fall to 21000-20800.

Nifty (23739.25, 1.62%) rose well yesterday. 23800-24000 is a crucial resistance, which if broken can indicate a trend reversal and take it up to 24500 and higher. That will negate the chances of falling back to 23500-23000 again.

Nikkei (38727.14, -0.18%) trades below 39000. While below 39000, the index could decline towards 38500-38000. Overall, the index is expected to trade within the 38000-40000 range.

Shanghai (3239.3194, -0.35%) trades below 3250. While below 3250, it can dip to 3200-3150. A rise past 3250 would take the index higher to 3300-3330.

Crude oil continues its downtrend and may target $ 74-73 for Brent and $ 70-69 for WTI on the downside. Gold has seen a slight rise but could experience a pullback towards $ 2850-2800 in the near term before resuming its uptrend towards 2900. Silver and Natural Gas could target $ 33.0-33.5 and $ 3.4-3.6, respectively, on the upside. Copper remains bearish and may fall to $ 4.2-4.1 while below $ 4.4.

Brent ($ 76.06) reached a low of $ 74.15 before closing higher at $ 76.20 yesterday. The downward pressure persists, and it may fall further towards $ 74-73 in the near term, invalidating our earlier bullish outlook.

WTI ($ 72.42) dropped to a low of $ 70.26 yesterday before closing higher above $ 72. It may continue to decline further towards $ 70-69 in the coming weeks.

Gold ($ 2880.20) has seen a slight increase towards its immediate resistance. If this resistance holds, a pullback towards $ 2850-2800 seems likely in the near term.

Silver ($ 32.81) has risen as expected and could target $ 33.0-33.5 in the near term.

Copper ($ 4.36) has moved up to its immediate resistance as anticipated. If the resistance holds, a decline towards $ 4.2-4.1 may occur in the coming weeks.

Natural Gas ($ 3.2240) has fallen slightly but is holding above $ 3.2. While it remains above this level, it could test $ 3.4-3.6 on the upside before turning bearish towards $ 3.0-2.8.

5:00 10:30 IN Services PMI
… Exp 60.7 … Expected 56.8 … Previous 59.3

9:00 14:30 EU Composite PMI
… Exp – … Expected 51.4 … Previous 49.6

13:15 18:45 US ADP Emp
… Exp – … Expected 149K … Previous 122K

13:30 19:00 US Trade Balance
… Exp – … Expected -97.1 … Previous -78.2

DATA YESTERDAY
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No major data released Yesterday.