The ECB kept rates unchanged but made no mention of rate cuts in 2024, in contrast to the FED‘s dovish tone the day before. The ECB expects inflation to pick up and price pressures to remain intact. The rally in the euro and fall in the dollar index seen after the FOMC meeting remained intact after the ECB meeting.
However, both the Euro and the Dollar Index have key resistance and support coming up that could hold and cause reversals in the next 2 weeks. EURJPY has risen to support at 154 and could trade in a range of 154-158 while USDJPY looks bearish towards 140/138. Strength in the Aussie and Pound remains intact, but both could face rejection from 0.68 and 1.28 respectively. USDCNY could rise towards 7.15/16 while above 7.10. USDRUB and USDINR could continue in the 89-91 and 83.25-83.40 range. EURINR has rallied well but could face rejection at 92.
US Treasury yields continue to fall. The view is bearish. Further decline is on the cards. German yields are coming down in line with our expectations and may fall further from here. The 10yr and 5yr GoI have broken their sideways range to the downside. The outlook is bearish for further downside.
Dow Jones continues to rise and remains bullish for the near term. DAX touched 17000 and has come down but outlook remains bullish while above support at 16600-16500. Nifty has risen sharply above 21000 and looks bullish to target news highs. Shanghai is inching lower but downside seems limited to 2930-2925. Nikkei is stuck in a tight range.
Crude has rallied well in line with expectations and looks bullish for the near term. Gold is slightly lower, but the downside may be limited to 2040-2020. Silver and copper need a sustained break above intermediate resistance to strengthen bullish momentum. Natural gas has room to test its resistance before a pause can be seen.
