Fresh attacks reported in the Strait of Hormuz have led the Dollar to gain against most major currencies. Rise in the Dollar Index towards 101.50-102 can drag the Euro down to 1.1350-1.13. The Yen is overall in depreciating mode, targeting 163/164. EURJPY is headed towards 186, triggered by Yen weakness. USDCNY can face rejection from 6.81/8250 to fall towards 6.77/76 in the medium term. EURINR remain bearish and could decline if support at 108 on the cross and 94.75 on USD/INR fail to hold. Aussie and Pound decline towards 0.69 and 1.33 on Dollar gains.

Dollar Index (101.199) gains afresh on renewed strikes on Iran. A rise towards 101.50-102 comes into the picture while the index trades above 101 in the next few sessions, keeping the near-term view bullish. This could aid the EURUSD (1.1399) to drift towards 1.1350-1.1300.

Dollar-Yen (162.39) has risen well above 162 and has scope to rise to 163-165 in the coming days as the pair looks strong above 160. The trend remains upward for the medium term. Such a weakness in the Yen could push EURJPY (185.16) towards 186 initially, which, if breaks higher, can open up chances of 187/188. Till then, 183-186 could be a range for the cross.

USDCNY (6.8016) can face rejection from 6.81-6.8250 region to fall back towards 6.77/76.

Aussie (0.6935) and Pound (1.3347) have dipped on a fresh rise in the Dollar Index. While the index trades higher, Aussie and Pound can continue to dip towards 0.69 and 1.33.

USDINR (95.9775) has slipped below 95, contrary to expectations of a break above 95.50, and may now test moving-average support near 94.80–94.75 this week. Price action around 94.75 will be crucial; a hold can trigger a bounce, while a break may extend the decline towards 94.50–94.15. EURINR (108.3350) is headed towards initial support at 108, a break below which can open room for 107.50–107, from where a bounce may emerge later. The fall in EUR/INR could accelerate if USD/INR continues to fall in the coming sessions.

The US Treasury Yields have risen sharply to test their resistance much faster than expected. The rise in oil price has pushed the yields higher. A follow-through rise from here can take the yields much higher from here. The German Yields have also risen sharply. While this rise sustains, they can rise more and the fall-back move expected earlier may not happen. The 10Yr GoI has bounced slightly. But resistance can cap the upside and drag them lower again.

The US 10Yr (4.55%) and 30Yr (5.06%) yields have risen to 4.55% (10Yr) and 5.05% (30Yr) a bit faster than expected. A follow-through rise from here can take them higher to 4.6% (10Yr) and 5.1%(30Yr) and higher. Else they can fall back to 4.5%-4.45% (10Yr) and 5%-4.95% (30Yr). We will have to wait and watch.

The German 10Yr (2.99%) and 30Yr (3.58%) have risen sharply. While above 2.95% (10Yr) and 3.55% (30Yr), a further rise to 3.05%-3.1% (10Yr) and 3.65%-3.7% (30Yr) is possible. That will negate the fall-back move that we had expected earlier.

The 10Yr GoI (6.6958%) has bounced slightly but may face resistance in the 6.7%-6.75%. While the resistance holds, the bias is negative to see a fall to 6.65%-6.6%. The big picture is bearish to see 6.5%-6.4%.

Global equities have come under pressure as renewed Middle East tensions and fears of supply disruptions weighed on market sentiment. Dow and DAX can decline further towards 52500-52000 and 25000 respectively. Nifty may see a gap-down opening, but support near 24250 could trigger a bounce back towards 24600-24800. Nikkei is likely to trade within the 67500-73000 range unless it breaks below 67500. Shanghai has turned weak after breaking below key support and can decline further towards 3950-3900.

Dow (53158.88, -0.07%) has fallen back after testing a high of 53656 yesterday due to renewed fears of supply disruptions in the Strait of Hormuz. If fresh tensions escalate in the Middle East, a further decline towards 52500-52000 cannot be ruled out.

DAX (25635.41, +0.04%) has pulled back sharply to a low of 25550 yesterday, in line with our caution, amid renewed fears of escalation in the Middle East. A further decline towards 25000 remains likely in the coming sessions.

Nifty (24,398.70, -0.13%) attempted to rise towards 24600 as expected but faced rejection near 24531 before closing below 24400. As concerns over fresh geopolitical tensions have resurfaced, a gap-down opening near 24250 is possible today. If support near 24250 holds, a bounce back could take the index higher towards 24600-24800.

Nikkei (68030, +0.27%) has fallen sharply to a low of 67490 yesterday. While above 67500, we expect it to trade within the broad range of 67500-73000. However, a break below 67500 would drag it further down towards 67000-66500.

Shanghai (3987.66, -1.26%) has broken below its immediate support, contrary to our expectations, and fell to a low of 3971.76 yesterday amid renewed concerns over crude supply disruptions following fresh attacks in the Middle East. A further decline towards 3950-3900 remains likely.

Crude prices have rebounded sharply on renewed supply disruption fears following reports of attacks on vessels near the Strait of Hormuz. Brent and WTI can rise further towards $ 80-$ 85 and $ 75-$ 80 respectively. Gold remains under pressure and can decline towards $ 4100-$ 4000 while resistance near $ 4200-$ 4250 holds. Silver has turned weak below $ 65 and can fall towards $ 55. Copper remains constructive despite the recent dip and can rise towards $ 6.30-$ 6.40. Natural Gas is likely to remain range-bound within the broader $ 3.00-$ 3.50 range.

Brent ($ 75.63) has bounced back sharply to a high of $ 76.60 after reports that a Qatari LNG carrier and a Saudi oil tanker were damaged near the Strait of Hormuz, raising fresh concerns over supply disruptions. A further rise towards $ 80-$ 85 can be seen.

WTI ($ 71.80) has bounced back sharply to a high of $ 72.51 yesterday, contrary to our expectations, amid renewed fears of supply disruptions. A further rise towards $ 75-$ 80 can be seen over the coming weeks.

Gold ($ 4113.50) is falling in line with our caution yesterday. While the immediate resistance near $ 4200-$ 4250 holds, a further pullback towards $ 4100-$ 4000 remains likely in the near term.

Silver ($ 60.20) has turned lower, contrary to our expectations. While below $ 65, it remains vulnerable to a further decline towards $ 55 in the near term.

Copper ($ 6.18) has dipped, contrary to our expectations, but our view remains intact for a rise towards $ 6.30-$ 6.40 in the near term.

Natural Gas ($ 3.28) can continue to trade within the broad $ 3.00-$ 3.50 range for some time.

NO MAJOR DATA WILL BE RELEASED TODAY.

DATA YESTERDAY
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GMT 12:30 IST 18:00 US Trade Balance
-51.27 …Market -78.50 …Previous -55.88 ….Actual -77.59