Morning briefing: Euro can test 1.1500-1.1400 if the fall extends

The US and EU Commission made a trade agreement with an unbalanced deal that slapped a headline 15% tariff on EU goods. The Dollar Index is rising within its 96-99 range and a confirmed break past 99 can take it towards 101. The Euro has fallen below 1.16 and can test 1.15-1.14 if the fall extends, EURINR is nearing the support at 100.50 which can be tested soon. EURJPY appears to have peaked at 173.90 and any fall below 171 can drag it further to 170-168. USDJPY and USDNCY are trading near the upper end of their ranges of 146-149 and 7.14-7.20 respectively. The Aussie is coming off within its 0.6650-0.645 range, while the Pound has slipped below 1.34 and failure to see a bounce back can drag it further to 1.32 or even lower. USDINR is currently trading at 86.7270 on the NDF. Overall, while above 86.60, a further rise to 86.85-87.00 is possible. US Case Schiller and US Consumer Confidence data releases are scheduled today.

The US Treasury yields continue to remain stable. They can avoid a fall and rise further if they manage to sustain above their immediate support. The US Fed meeting outcome tomorrow is important to watch. While the rates are likely to be kept unchanged, any hint on the future rate path and the tariff impact will be much more important to be seen. The German yields have dipped. But the bias remains positive. The yields can rise more from here. The 10Yr GoI (06.33 GS 2035) is moving up within its broad range. The bias is positive to see a bullish breakout of this range eventually.

Most indices look weak ahead of the FOMC meeting tomorrow, where the central bank is expected to keep rates unchanged. Dow has dipped but looks bullish above 44500, while the Dax can extend its fall to 23500-23000 if it fails to bounce back above 24000 immediately. Nifty fell sharply on heavy selling seen yesterday, but has support near 24600. A break below 24600 can take it further down towards the lower support at 24400. Nikkei and Shanghai can test 40500-40000 and 3550, respectively, before a bounce is seen later towards 42000 and 3600+.

Metals and Natural Gas trade lower while Brent and WTI have moved up. Gold and Silver have crucial supports at $3300 and $38 above which the prices may have scope to move up; else can be vulnerable to decline towards $3200 and $37, respectively. Copper looks strongly bearish, and a decisive break below 5.6, if seen, can drag it down to 5.4-5.3. Brent and WTI have risen well on the easing of trade deal between the US-EU and ahead of the FOMC meeting yesterday where the interest rates are expected to remain unchanged favoring the Dollar. Brent and WTI have scope to rise towards $72-75 and $68-70, respectively, but the broader outlook remains bearish in the medium term.

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