Morning briefing: EUR/USD has declined as expected

The U.S. announced a reduction in tariffs on Indian goods from 25% to 18%, while the Dollar Index strengthened on a better than expected Manufacturing ISM at 52.6. DXY now faces resistance near 98.00-98.50, which can cap the upside and keep it range-bound between 96.00–98.50. EURUSD has declined as expected; support near the 1.18 MA needs to hold for a rebound. EURINR have declined due to Rupee strength. Immediate support near 106.00-105.50 can get tested if the fall continues. URJPY can remain within the 182–186 range, while USDJPY, below 156, may test 154-153. USDCNY can drift toward 6.90, the Aussie may trade within 0.69-0.71. While Pound can attempt to bounce towards 1.38 if it sustained above 1.36. USDINR has fallen sharply on the trade deal news. Immediate support is coming around 90 which can get tested soon. US ADP Employment data release is scheduled today.

The US Treasury yields are moving up within their range in line with our expectation. Our bias is positive to see a bullish breakout of this range eventually if not immediately. The German Yields are moving up. Further rise from here is needed to ease the danger of falling back. We will have to wait and see. The 10Yr GoI has surged above its resistance. Higher borrowing plan announced in the Budget on Sunday has triggered this rise. There is room for the 10Yr GoI to move further higher from here.

The Dow and the DAX trade higher and look bullish towards 50000/52000 and 25000/25500 respectively. The overnight announcement of US-India trade deal and lower tariffs of both countries on each others goods could rise optimism in the Asian indices. The agreement of India to stop buying Russian oil and to potentially buy US and Venezuela oil has led to a trade deal In favor of India with reduced tariffs. Nikkei is already up sharply by 2.5% and could test 54000-55000. The posiitve trade deal could lead to a rally in Nifty today. Near term target of 26000-26500 is still in place while above 25000. Shanghai has broken below 4050 but if it does not bounce back immediately, it has scope to test 3980-3950 before pausing for a reversal.

Brent and WTI have fallen as expected on easing Middle East tensions, with downside seen towards $64 and $60. Gold and Silver have bounced from key supports near $4400 and $70, keeping the upside open towards higher levels. Copper may test support near $5.40 before a possible rebound. Natural Gas holds near $3.20, above which a bounce is possible, else further downside cannot be ruled out.