Morning briefing: Euro can head towards 1.0850

The BOE and FED both went ahead with the 25 bps rate cuts each which were widely expected. The Dollar Index is trading lower within its range of 150.50/60-103. Euro, if sustained above current levels, can head towards 1.0850 or higher in the near term. EURINR has bounced well from the support around 90 and the revised range of 90-92 can hold for some time. USDJPY has declined within its range of 150-155, while EURJPY is trading near the lower end of its range of 167-165 region. USDCNY fell sharply and if the Stimulus measures policy meeting favors the Yuan, then it can appreciate further to 7.10 or even higher. Aussie and Pound can trade within broad range of 0.65-0.67 and 1.2900-1.3150 in the near term respectively. USDINR made an all-time high of 84.3775. On the NDF the pair is trading lower which gives us a hope of seeing a dip while below 84.40 to 84.30/20, else it can extend the rise to 84.50.

The US Treasury yields have come down sharply. The resistances are holding well now. That keeps intact our view seeing a fall going forwards. Need to see if the yields are falling further from here to confirm the same. The US Federal Reserve cut the interest rates by 25-bps as expected yesterday. The Fed Fund Rate now stands at 4.5%-4.75%. The German yields continue to move up and are keeping intact our bullish view. The yields can rise more from here. The 10Yr GoI can now move up within this narrow range. Bias is positive to see a bullish breakout of this range eventually.

Dow Jones remained flat and sustained above 43500 but watch for a possible decline from the crucial resistance zone of 44000-44500. DAX sustained above 19000 and rose above 19300. The view is bullish towards 19800-20000. The Nifty failed to break above 24600, retracting to 24200. A drop below the 24000–23700 support zone could lead to a further decline to 23500. The Nikkei, while holding above 39000, has come off from an intra-day peak of 39818.41; however, a re-test of 40000 remains on the table if it sustains above 39000. The Shanghai Index has risen above 3400, reaching a recent high of 3509 and now trades below 3500. Monitoring price action around 3500 will be key to determining the next directional move.

Crude and Metal prices have recovered significantly from yesterday’s fall. Brent and WTI can range between $76-71 and $73-67 respectively for some time. Gold, Silver and Copper have recovered sharply. Gold and Copper can continue to rise towards 2750-2800 and 4.5-4.6 respectively in the near term. While Silver needs to surpass 32.5 to see higher levels of 33-34, else can fall back to 29.5. Natural Gas trade between 2.9/3.0-2.6 for some time.

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