Morning briefing: EUR/USD weakness could resume in the medium term

The FED kept rates unchanged as expected, and the ECB is also expected to keep rates unchanged today. The Dollar Index has dipped from 102.50, while the euro has moved up from 1.1113. But overall, the Dollar strength and Euro weakness could resume in the medium term. Dollar-Yen and EURJPY could initially dip to 157 and 176 before rising towards 158/159 and 177/178 in the longer run; while EURINR may trade between 105.70 and 106.60 with some chances of a dip to 105. The pound needs to hold above 1.33 to prevent another decline to 1.32 and instead rise towards 1.34/35. The Aussie is stable, trying to slowly inch upwards. USDCNY looks weak towards 6.65. USDINR tested 95 as expected. With downside limited to 95-94.90 just now, we may expect trade within 94.90-95.50 for a few sessions. A break higher will bring in higher targets of 95.80-96.00 into the picture.

The US Treasury Yields remain stable. The yields are likely to see a rise eventually. But it is still unclear whether this rise can happen from here itself or after a fall. We will have to wait and watch. The US Fed kept the rates unchanged at 3.75%-4% in line with market expectation in its meeting yesterday. German Yields are also stable. They can fall to test their support first and then resume their broader uptrend. The resistance in the 10Yr GoI continues to cap the upside. That keeps the chances high for seeing a corrective fall going forward.

Dow is holding above 52,000, which keeps the door open for a rise toward 53,000 or higher. DAX needs a clear move above its recent high to push toward 25,800–26,000; otherwise, it could slide back down toward 25,500–25,000. Nifty remains bearish below 22800, with scope to decline towards 22350-22250. Nikkei is struggling to sustain above 64000, and a sustained break below can open a decline towards 62000. Shanghai remains weak below 3700 and can fall towards 3600-3500.

Crude oil prices have bounced back. Brent and WTI hold upside momentum toward $114–$116 and $102–$104 respectively. Gold has dipped and must sustain above $4000 support to avoid further downside toward $3900–$3800, while Silver remains on track for a decline toward $50 as long as $55–$56 caps gains. Copper pulled back after testing $6.73 and risks a drop to $6.6–$6.5 unless it breaks back above $6.7. Natural Gas continues to consolidate within a steady $2.7–$3.2 range.