Escalation of tensions in the middle east has spurred rise in the Dollar Index leading to weakness in most other currencies against the US Dollar. Dollar Index trades higher today and a sustained break above 99.50 will take it to 100-100.50 while Euro can decline below 1.1575 if such a rise in the Dollar Index is seen. EURINR could rise to 111.85-112 soon before facing rejection from there. EURJPY and USDJPY could trade within 185-186 and 159.00-160.50 respectively while USDCNY may rise to test 6.7850 before facing rejection from there. Aussie and Pound can trade within 0.72-0.71 and 1.34-1.3550 while USDINR can rise towards 96 where it can face some resistance to fall back towards 95.75-95.50 again.

Dollar Index (99.441) tested 99.552 before coming off slightly. A sustained break above 99.50, if seen can take the index towards decent upper resistance of 100-100.50.

EURUSD (1.1607) could extend its downside to 1.1575 but a break below that could bring in 1.15-1.14 again into the picture.

EURINR (111.2167) tested 111.6361 yesterday as expected but has come off slightly thereafter. While above 110.35, we may expect a test of 111.85-112 soon.

EURJPY (185.59) traded between 186-185 yesterday as expected and the same range is likely to hold for today as well. A decisive breakout on either side thereafter will decide the future course of direction. Below 185, there can be scope for a fall to 184/183.

Dollar-Yen (159.88) has scope for a rise to 160.50-161 before coming off from there towards 159 in the medium term.

USDCNY (6.7737) has been rising over the last 2-sessions. There can be decent resistance near 6.7850 from where a dip looks possible back towards 6.77/76 in the medium term.

Aussie (0.7130) fell sharply from 0.7181 but while it holds above 0.71, there can be scope to rise back within the 0.71-0.72 range.

Pound (1.3424) has decent support near 1.34/1.3360, which can be tested before a bounce back towards 1.35-1.3550 is seen in the medium term.

USDINR (95.71) rose beyond our expected 95.50 to test 95.80. Decent resistance is seen at 96 from where a rejection can be possible back towards 95.50-95.00. Else, failure to hold below 96 would prove to be bullish towards 96.50-97 again in the medium term.

The US Treasury Yields are attempting to bounce back from their support. A strong follow-through rise is needed to avoid the danger of seeing an extended fall and go higher. We will have to wait and see. The German Yields have bounced back sharply. If this sustains, then the expected fall may not happen, and the yields can rise straight away. The 10Yr GoI remains stable and mixed. As mentioned earlier, it has to get a decisive break above the immediate resistance to go higher. Else one more leg of fall can still be seen.

The US 10Yr (4.48%) and 30Yr (4.98%) Treasury yields are attempting to bounce back from their respective supports of 4.45% (10Yr) and 4.95% (30Yr). A strong follow-through rise is needed to avoid the fall to 4.35% (10Yr) and 4.85% (30Yr) from here. Wait and watch.

The German 10Yr (3.03%) and 30Yr (3.57%) yields have risen back sharply. A further rise from here can negate the fall to 2.9%-2.85% (10Yr) and 3.45% (30Yr). In turn, the expected rise to 3.1%-3.2% (10Yr) and 3.65%-3.7% (30Yr) can happen straight away.

The 10Yr GoI (7.0240%) remains stable above 7%. A strong rise above 7.05% is needed to go up to 7.15%. Only then the fall to 6.9% will get negated.

Global equities have weakened due to renewed Middle East tensions. Dow and Nikkie could have further downside possible if key support levels at 50500 and 67000 are broken. DAX has turned bearish after falling below 25000 and may decline further towards 24500-24000. Nifty has recovered from recent lows and, while above 23,250, can rise towards 23,600 over the week. Shanghai is testing support near 4050, but as long as this level holds, a bounce towards 4100-4125 remains possible.

Dow (50762, -0.01%) has fallen back sharply due to elevated tensions in the Middle East. It needs to break below 50500 to invalidate our earlier view of a rise towards 52000 and trigger a decline towards 50000-49000.

DAX (24756, -0.41%) has broken sharply below 25000, contrary to our expectations, and tested a low of 24737 yesterday. A further decline towards 24500-24000 looks likely in the near term.

Nifty (23,405.60, -0.33%) tested a low of 23,151 but managed to recover above 23,250 and closed higher yesterday. While it stays above 23,250, it has scope to rise towards 23,600 over the week.

Nikkei (67080.46, +1.44%) has fallen back sharply due to renewed tensions in the Middle East. A break below 67000 would trigger a further decline towards 66000-65000.

Shanghai (4070.68, -0.32%) is attempting to break below 4050, but while this level holds, a bounce back towards 4100-4125 can be seen.

Brent and WTI continue to strengthen and can rise towards $ 100 if geopolitical tensions remain elevated. Gold and Silver have weakened but are likely to remain within their broader $ 4400-$ 4600 and $ 70-$ 80 ranges respectively. Copper has corrected sharply but could rebound towards $ 6.70 or higher if support near $ 6.40 holds. Natural Gas remains positive above $ 3 and can rise further towards $ 3.30-$ 3.50.

Brent ($ 96.57) and WTI ($ 94.87) are moving higher, and if tensions remain elevated, a further rise towards $ 100 can be seen in the near term.

Gold ($ 4487.80) and Silver ($ 73.39) have declined but can continue to trade within the broad ranges of $ 4400-$ 4600 and $ 70-$ 80 respectively for some time.

Copper ($ 6.46) fell sharply by 2.53% yesterday due to Middle East tensions. Immediate support can be seen near $ 6.40. If this level holds, a bounce back towards $ 6.70 or higher is possible. Otherwise, the risk of a further decline remains.

Natural Gas ($ 3.2350) has bounced back, and while above $ 3, a rise towards $ 3.30-$ 3.50 can be seen.

GMT 0:30 IST 06:00 Australia Trade Balance
…Market -1.61 …Previous -1.024 …Actual 1.791

GMT 6:30 IST 12:00 CH CPI
…Market 0.30 …Previous 0.60

GMT 9:00 IST 14:30 EU Retail Sales
…Market -0.30 …Previous -0.10

DATA YESTERDAY
==============
GMT 23:00 IST 04:30 AU PMI
…Previous -27.9 …Actual -22.4

GMT 1:30 IST 07:00 AU GDP
…Market 0.50 …Previous 0.79 …Actual 0.27

GMT 5:00 IST 10:30 IN Services PMI
59.3 …Market 58.9 …Previous 58.8 …Actual 59.8

GMT 12:15 IST 17:45 US ADP Emp
-57.0 …Market 116.0 …Previous 109.0