The Dollar Index fell sharply despite the fact that the FED kept rates unchanged. However, the probability of a rate hike in Sep-26 now stands at 50% from earlier 30%. The major currencies look strong against the Dollar, but this strength seems temporary as a bounce back in the Dollar Index from 100.70 would flip the case in the next few sessions. USDINR may open with a gap down today, with a possible test of 95.50-95.25 before pausing for a reversal.

Dollar Index (100.908) surprisingly declined although the FED kept rates unchanged. However, a 25bps rate hike can be expected in the Sep-26 meeting. The Dollar Index seems to have ignored the hawkish view and tested a low of 100.76 so far, testing the bottom of our 101.50-100.70 range mentioned in the past few editions. While above 100.70, the index can attempt to rise back towards 101.50 in the next few sessions.

EURUSD (1.1454) rose sharply, breaking above our expected 1.1420 mentioned yesterday. A bounce in the Dollar Index from current levels would take the Euro back towards 1.14 or lower.

EURINR (109.5917) has risen well on Euro strength. A test of 110 is possible in the next few sessions before a possible dip is seen back towards 109.

Dollar-Yen (163.46) has dipped on overnight weakness in the Dollar Index. USDJPY may limit its fall to 162.50 with upside target intact at 165.

EURJPY (187.22) has moved up well. However, there can be an immediate dip from here towards 187-186.50. Eventual rise to 188 remains intact while above 186.

USDCNY (6.7611) has dipped. It could test 6.75 before bouncing back towards the upper end of the 6.75-6.7850 range.

Aussie (0.6961) and Pound (1.3353) have risen well today on Dollar weakness, but it is very short-lived. A rise in the Dollar Index from current levels can take the Aussie and Pound down towards 0.69 and 1.33/3250 again in the coming sessions.

USDINR (95.6575) managed to close lower yesterday. With the overnight weakness in the Dollar Index, we may expect a gap-down opening on the USDINR spot today, with possible downside extension to 95.50-95.25 before any bounce is seen from there.

The US Treasury Yields have risen sharply at the far-end after the US Fed meeting outcome yesterday. The bounce back move has happened from the support as expected. That keeps intact our overall bullish view. The yields can rise more. The Fed kept the rates unchanged yesterday in line with the market expectation. The German Yields are rising back from their support as expected. The broader uptrend is intact, and the yields can rise more going forward. The 10Yr GoI is rising back. A break above the immediate resistance can take it further higher before the broader downtrend resumes.

The US 10Yr (4.68%) and 30Yr (5.20%) yields have surged back. The 10Yr keeps intact our bullish view of seeing 4.8%. The 30Yr has risen to 5,2% as expected. It can see an extended rise to 5.35%-5.4%.

The German 10Yr (3.16%) and 30Yr (3.63%) Yields have risen back from their support as expected. That keeps intact our bullish view to see 3.25% (10Yr) and 3.75% (30Yr).

The 10Yr GoI (6.7946%) has bounced back. A rise to 6.85% is possible if it breaks above 6.8%. That will bring back the chances of seeing 6.9% on the upside first before the expected fall to 6.7% and 6.6% happens.

Dow has turned weaker after slipping below 52000 and can test 51000 while it remains below this level. DAX needs to sustain above 25500 to extend its rally towards 26000; otherwise, it could pull back towards 25000-24800. Nifty remains constructive above 24000 and can rise further towards 24400-24500. Nikkei has rebounded from recent lows but faces strong resistance near 65000, below which the downside towards 58000 remains intact. Shanghai continues to trade with a weak bias and can decline towards 3750 while below 3900.

Dow (51900.66, +0.26%) plunged sharply to a low of 51630 yesterday, falling by 2.23% after the Fed kept interest rates unchanged at 3.75%. While below 52000, a test to 51000 can be seen.

DAX (25584.19, +0.19%) is trading above 25500 for now and needs to sustain above this level to extend its rise towards 26000. Otherwise, it could decline towards 25000-24800.

Nifty (24,250.20, +1.10%) rose to test a high of 24283 yesterday. While above 24000, the index can extend its rally towards 24400-24500 in the near term.

Nikkei (62520.88, +1.92%) has rebounded sharply today after testing near our expected level of 60000 yesterday. It faces immediate resistance near 65000. While this level holds, the index remains vulnerable to a decline towards 58000.

Shanghai (3819.09, -0.24%) has bounced back slightly, but while below 3900, it remains vulnerable to a decline towards 3750.

Crude prices remains volatile amid ongoing geopolitical tensions in the Middle East. Brent and WTI are likely to remain within the broad $ 80-$ 100 and $ 75-$ 95 ranges respectively until clearer directional cues emerge. Gold continues to trade within the $ 4000-$ 4200 range, while Silver is expected to remain range-bound between $ 55 and $ 65. Copper remains bullish above $ 6.30 and can rise further towards $ 6.50. Natural Gas has recovered but remains vulnerable to a decline towards $ 2.65.

Brent ($ 89.44) and WTI ($ 83.68) remain volatile amid the ongoing tensions in the Middle East. A broad range of $ 80-$ 100 for Brent and $ 75-$ 95 for WTI could hold for some time until further directional clarity emerges.

Gold ($ 4142.65) has risen and is likely to remain within the broad range of $ 4000-$ 4200 for some time.

Silver ($ 58.49) can continue to trade within the broad $ 55-$ 65 range for some time.

Copper ($ 6.41) has risen in line with our expectations and can extend its gains towards $ 6.50 in the near term while above $ 6.30.

Natural Gas ($ 2.7330) has bounced back but remains vulnerable to a decline towards $ 2.65.

9:00 14:30 EU Unemp
…Expected 6.2% …Previous 6.2%

9:00 14:30 EU Biz Climate
…Previous 95.0 …Expected 96.0

9:00 14:30 EU GDP
…Expected 0.2 % …Previous -0.2 %

11:00 16:30 BOE Mtg
…Expected 3.75 % …Previous 3.75% …Actual 3.75%

11:00 16:30 UK BOE Minutes
…Expected 2-0-7 …Previous2-0-7

12:30 18:00 US Personal Income
…Expected 0.3 % …Previous 0.7 %

12:30 18:00 US PCE
Expn 0.3 % …Previous 0.4 %

12:30 18:00 US Core PCE
Expn 0.3 % …Expected 0.1 % …Previous 0.3 %

12:30 18:00 US GDP
Expn 2.3 % …Expected 2.3 % …Previous 2.1 %

DATA YESTERDAY:-
—————
AU CPI
Expn 4.0 % …Expected 4.1 % …Previous 4.1% …Actual 3.9 %

US FOMC Meeting
…Expected <3.75 % ...Previous <3.75 % ...Actual<3.75%