Currency Market Overview
The Dollar Index tested the key support level at 100.58, as anticipated, before bouncing back. A drop below 100.50 could push it down further to 99.50. The Euro has strengthened but faces strong resistance between 1.1150 and 1.1200, indicating limited upside potential. USDJPY and EURJPY look bearish, potentially dropping to 139-138.40 and 154-152, respectively. The Australian Dollar and British Pound could rise towards 0.68/0.6850 and 1.33-1.3350, respectively. USDCNY may continue its decline towards 7.05/7.02, especially if it breaks below 7.08. EURINR has climbed past 93, but it must sustain this level to target 93.50/94, or risk falling back towards 92.40-92.00. Meanwhile, USD INR is expected to trade within the 83.80 to 84.00 range.
Key US economic data scheduled for release today include Retail Sales, Industrial Production, and Capacity Utilization. The FED policy meeting tomorrow is also a major event to watch.
Bond Market Update
US Treasury yields continue to decline as expected, with the downtrend firmly intact. The outcome of tomorrow’s Federal Reserve meeting will be pivotal, especially with markets pricing in a 25-bps rate cut. However, there are rising expectations for a 50-bps rate cut. The situation will be clearer tomorrow.
In Europe, German bond yields resumed their downward movement following a brief rebound, reinforcing the broader downtrend. Further declines in yields are likely in the coming days. India’s 10-Year Government Bond yield is approaching the projected level of 6.75%, and while a temporary bounce is possible, the broader trend remains bearish.
The Dow Jones is advancing towards a crucial resistance level, which could trigger a pullback if the resistance holds. All eyes are on tomorrow’s FOMC meeting, where the Federal Reserve is expected to announce a rate cut of either 25 bps or 50 bps. The DAX must break above 18,700 to maintain a bullish outlook; failure to do so could send it back down to 18,400-18,300. In India, the Nifty index remains stable below 25,450 but could rally to 25,700-25,800 if it breaks through. Nikkei is likely to trade sideways below 37,000 for now.
Brent and WTI crude oil have bounced back but need to surpass the resistance levels at $74-75 and $71-71.50, respectively, to turn more bullish. Otherwise, they may trade sideways for a while. Gold is hovering just below its critical resistance level, and it remains to be seen whether it will break higher or retreat. Silver, Copper, and Natural Gas have room to rise to 32.00-32.50, 4.4-4.5, and 2.4-2.5, respectively.
