Morning briefing: The US Treasury yields are struggling to get a strong follow-through rise

The Dow Jones has surged above 44000, invalidating our previous bearish outlook.

The fall in Eurozone PMI led the Dollar Index to rise sharply to 108.07 and Euro to fall to the low of 1.0332 on Friday but both the Euro and the Dollar Index have reversed from those levels. While the Dollar Index holds above 106, the medium term looks bullish towards 109-110. EURINR has recovered above 88 and could be headed towards 89-89.50. Aussie and Pound have also moved up and could be headed towards 0.6550-0.66 and 1.2750 respectively. USDCNY is headed towards resistance near 7.25. We need to see whether the resistance holds and pushes the pair back towards 7.20/18 or takes it higher to 7.27. The Dollar Yen is trading within its 152-155 region but overall, the view is bullish towards 157-158 in the near term. EURJPY needs to see a sustained rise past 162 to negate a fall to 160-158 in the coming sessions. USDINR can trade below 84.50 for the next 1-2 weeks before rising higher towards 84.60.

The US Treasury yields are struggling to get a strong follow-through rise and break the immediate resistance. That keeps alive the chances of seeing a fallback in the short-term. The German yields have come down below their support. This is contrary to our expectation. A further fall from here will negate our bullish view and can drag the yields lower. The 10Yr GoI is inching up. The bullish view is intact and the yield has room to rise more.

While above 44000, it could pave the way for further gains towards 44500–45000. However, while below 45000, our broader view is bearish towards 42000/41000. Meanwhile, the DAX has climbed past 19300, with a decisive break above 19600 required to target 20000. Nifty rose sharply above 23900 on Friday. A sustained move above 24100 would open the door for a further rise to 24500/24700. Conversely, failure to breach 24100 could pull the index lower to test support in the 23500-23000. The Nikkei opened higher, briefly reaching 39053.64 before easing slightly. As long as it stays above 38500, the index remains poised to advance beyond 39000, targeting 39500–40000. Shanghai is holding above the crucial level of 3250 which needs to sustain for a rally toward 3350–3400 and beyond. A breakdown below this level, however, could lead the index to extend the downside towards support of 3150.

Crude prices have recovered due to the rising concerns about geopolitical risks from Iran and Russia. A further rise towards 77 (Brent) and 74 (WTI) can be seen in the near term. Gold has rallied and can target 2750-2800 in the upcoming sessions. Silver and Copper hold above their respective support levels and can move up towards 32 and 4.2-4.3. Natural Gas fell to 3.2 on Friday but bias is bullish towards 3.6-3.8 while above 3.

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