Morning briefing: Euro is testing the 1.0820 target

Good Morning!

Dollar Index needs to break past 105 to become bullish towards 106-106.50, while Euro is testing our target of 1.0820/1.08, from where a reversal towards 1.09 is likely. EURJPY and USDJPY continue to move up targeting 170 and 157/158 respectively while volatility remains low. USDCNY has risen sharply past 7.24 and can now head towards 7.25/26 on the upside. Aussie failed to hold the support at 0.6650 and has declined a bit. If the fall continues, might get extended towards 0.6550 in the coming sessions. Pound is likely to test 1.28 on the upside, while it sustains above 1.27. USDINR is closed today. EURINR can soon test our mentioned target of 90 on the downside.

The US Treasury yields remain stable. While they trade below their resistances a further fall is possible in the coming days. The resistances have to be broken to negate this fall and move up going forward. The German yields have bounced back again. The bullish view is intact. The yields can rise further from here. The 10Yr and 5Yr GoI have declined sharply after the RBI’s dividend announcement to the government yesterday. But key supports are coming up which are likely to hold. A sideways consolidation is possible for some time before the yields rise again.

Dow Jones and DAX have fallen on hawkish FOMC minutes. Minutes stated that FOMC members discussed holding interest rates steady for longer if inflation doesn't fall and expressed their willingness to tighten policy further if needed. Nifty continues to rally and has scope to rise towards its key resistance at 22800. Nikkei has bounced back as the mentioned support has held well and keeps our bullish view intact. Shanghai has fallen back but the downside could be limited to 3100.

Most of the commodities have fallen on Hawkish FOMC Minutes of the meeting except for Natural Gas which has seen a strong recovery. Crude remains bearish for the near term. Metals have supports coming up from where a bounce back is expected to be seen. Natural Gas has scope to test its key resistance before a corrective fall can happen.

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