Morning briefing: Euro has surged significantly past 1.0550

Commission President Ursula von der Leyen’s announcement of a €650 billion defence fund. As a result, Dollar Index slipped to the support near 105.50 region. The Index could still be vulnerable to fall towards 104.50 if it fails to sustain above 105.50 region. Euro has surged significantly past 1.0550 and a confirmed break past 1.0650 can take it higher towards 107 or even 108 on the upside. EURINR has risen past 92 and can soon test 93 on the upside. USDJPY and EURJPY can remain ranged within 148-152 156-160/61 region respectively for now. EURJPY has again declined sharply towards the support around 156 region. AUDUSD looks stable above 0.62 but could face the resistance at 0.63 soon. Pound is likely to test 1.28 soon. Thereafter, whether the rise extends further or not will have to be seen. USDNCY above 7.24, can attempt to rise back towards 7.28 in the near term. USDINR is stuck between 87.50-87.25 region. US ADP Employment data release scheduled today.

The US Treasury yields have risen back sharply. Resistances are ahead which will have to be broken decisively in order to negate our view of seeing a fall. We will have to wait and see if they are getting a strong follow-through rise from here or not. The German yields sustain higher. View remains bullish and they can rise more. The ECB meeting outcome tomorrow will be important to watch. Market expects a 25-bps rate cut and will be looking to see what their future policy path is. The 10Yr GoI is moving up in line with our expectation and keeps intact our bullish view.

As a reaction to Canada and China's latest tariffs on the US, the Dow Jones fell below 43000 and is likely to extend the losses to 42000-41800. DAX failed to sustain above 23000 and has sharply fallen below 22400. A break below 22000 would lead to further fall losses to 21700 and negate our bullish view to 23500. Nifty is holding at 22000 but remains vulnerable to witness a break below it and fall to 21700 and needs to rise past 22500 to mitigate the downside. Nikkei remains stable above 37000, but the bias remains negative for the index towards 36000-35000. Shanghai is oscillating near 3320. A rise towards 3350-3380 can be seen.

Crude oil prices continue to fall and may test $68 (Brent) and $65 (WTI) respectively in the near term. Gold, Silver, and Natural Gas look bullish, with potential targets at $2950-$3000, $33.0-$33.5, and $4.6-$4.7 respectively in the coming weeks. Copper remains within a range of $4.7-$4.5 for some time.

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