ECB hiked key rates by 25bps with a hawkish tone for inflation and expected weaker economic growth owing to higher energy prices and weaker confidence. It is likely to keep rates unchanged in its July-26 meeting. Although the rate hike was as expected and is positive for the Euro in the near term, weaker growth expectations have kept the Euro strength limited just now. A consolidation within 1.15-1.16 looks possible for the near term. The Dollar index may rise while above immediate support at 99.50. EURINR could be bearish while below immediate resistance near 110.75/111. EURJPY could test 186 before rejection while USDJPY is headed towards 161. USDCNY looks bearish towards 6.76/75 while below 6.78. Aussie can rise to 0.71-0.7150 while Pound can move to 1.3250 before rising back towards 1.3550. USDINR needs to hold below 96 for hopes of a decline towards 95.50/95 to keep alive.

Dollar Index (99.792) has support at 99.50 which if holds can take the index higher towards 100-100.50 in the coming sessions.

EURUSD (1.1565) moved up slightly to 1.15897 after the ECB hiked key rates by 25bps, in line with the market expectations. Today, the spot trades lower. It would be crucial to see if Euro breaks above 1.16 in the near term or not; else it can remain within the 1.15-1.16 regio for some more time.

EURINR (110.2561) has immediate resistance near 110.75/111 region which if holds can push the prices lower towards 110-109 region in the medium term.

EURJPY (185.37) can test resistance at 186 before falling from there towards 184/183 in the medium term while Dollar-Yen (160.25) is headed towards 161 and looks bullish while above 159.

USDCNY (6.7647) is likely to head towards 6.75 while below 6.78.

Aussie (0.7033) has scope to rise back towards 0.71-0.7150 if it holds above 0.70 in the near term. Else it can fall back towards 0.69.

Pound (1.3404) is trading in the middle of the broad 1.3550-1.3250 region and could have scope to test the lower level before bouncing back to the upside limit.

USDINR (95.7650) moved up sharply yesterday. The spot needs to remain below 96 for it to eventually dip towards 95.50-95.00 or lower in the next couple of weeks. Else a break above 96.00-96.20 could make it bullish for the medium term.

The US Treasury Yields have come down sharply. A fall in oil price after the US calling off the strikes on Iran has dragged the yields lower. The yields can fall more from here to test their support. Thereafter a bounce is possible again. The German Yields have also come down failing to sustain the bounce. That keeps the door open to see more fall again. The ECB raised the interest rates by 25 bps in its meeting yesterday. The rate hike was in line with market expectation and was already priced in the market. So, it did not aid the yields to go higher. The 10Yr GoI has turned down again. That keeps it vulnerable to break the immediate support and see an extended fall.

The US 10Yr (4.47%) and 30Yr (4.96%) Treasury yields have come down sharply. A test of .45%-4.4% (10Yr) and 4.95%-4.9% (30Yr) can be seen now. Thereafter we expect the yields to bounce back. We have to wait and see.

The German 10Yr (3.03%) and 30Yr (3.56%) yields have come down again failing to sustain the bounce. The chances of the fall to 2.9%-2.85% (10Yr) and 3.45% (30Yr) remains alive.

The 10Yr GoI (6.9174%) has come down again. While below 6.95%, the yield is vulnerable to break 6.9% and fall to 6.8%.

Global equities have rebounded sharply as easing Middle East tensions and improving risk sentiment supported markets. Dow, DAX and Nikkei have recovered from recent lows and can extend gains further in the near term. Shanghai has opened with a gap up and can rise towards 4050-4100 while above 4000. Nifty remains above key support near 23150 and can bounce back towards 23400-23600 if the positive sentiment persists.

Dow (50923) tested a low of 49758 yesterday before bouncing back sharply to close at 50875. The recovery came as concerns over the Middle East conflict eased following reports of progress in diplomatic efforts. While above 50000, a further rise towards 51500 can be seen in the near term.

DAX (24602) tested a low of 23977 yesterday before recovering to close at 24235. The easing of geopolitical tensions helped improve risk sentiment. While above 24000, the downside could remain limited and a rise towards 24800-25000 can be seen in the coming sessions.

Nifty (23161) failed to sustain above 23300 and closed lower yesterday. However, positive global cues following easing geopolitical tensions could result in a gap up opening today. While above the immediate support at 23150, a bounce back towards 23400-23600 can be seen over the coming week.

Nikkei (66705) rebounded sharply from a low of 62535 yesterday and closed higher at 66445. Improved global sentiment amid easing Middle East tensions has supported the recovery. A further rise towards 67000-68000 can be seen in the near term.

Shanghai (4039.81) closed at 3987.41 yesterday but opened with a gap up near 4017.86 today. While above 4000, the rise can extend further towards 4050-4100 in the near term.

Crude prices remain under pressure as easing Middle East tensions have reduced concerns over supply disruptions. However, a rebound towards $ 95-$ 100 remains possible if current support levels hold. Gold and Silver have bounced back sharply after testing key support levels. The downside may be limited for now, with scope for a recovery towards $ 4300-$ 4400 and $ 70-$ 72 respectively. Copper has also rebounded from support near $ 6.20 and can rise towards $ 6.50-$ 6.60. Natural Gas continues to hold above $ 3.00 and is likely to remain within the broader $ 3.00-$ 3.50 range.

Brent ($ 89.36) and WTI ($ 86.83) have fallen sharply as concerns over supply disruptions eased amid reports of progress in diplomatic efforts to contain the Middle East conflict. A sustained fall below current levels could drag prices further towards $ 85. Otherwise, a bounce back towards $ 95-$ 100 can be seen in the coming weeks.

Gold ($ 4211.70) tested a low of $ 4046.20 yesterday before bouncing back sharply from there. While above $ 4000, the downside could remain limited, and a further rise towards $ 4300-$ 4400 can be seen in the near term.

Silver ($ 67.11) tested a low of $ 61.60 yesterday and has bounced back strongly to open higher today. While above $ 60, a further rise towards $ 70-$ 72 can be seen in the coming sessions.

Copper ($ 6.41) tested a low of $ 6.17 yesterday before bouncing back to current levels. While above $ 6.20, the downside could remain limited, and a rise towards $ 6.50-$ 6.60 can be seen in the near term.

Natural Gas ($ 3.077) is holding above the key $ 3.00 support. While this level remains intact, it can trade within a broad range of $ 3.00-$ 3.50 for some time.

GMT 6:00 IST 11:30 UK Trade Bal
…Market -27.00 …Previous -27.22

GMT 12:00 IST 17:30 IN CPI
3.69 …Previous 3.48

DATA YESTERDAY
==============
GMT 12:15 IST 17:45 ECB Mtg
…Market 2.40 …Previous 2.15

GMT 12:30 IST 18:00 US PPI
0.62 …Market 0.70 …Previous 1.38

GMT 12:30 IST 18:00 US PPI ex Food & Energy (MoM)
0.5 …Market 0.5 …Previous 1.0