The Euro tested resistance above 1.2900 as US stocks started the day on a strong footing but the rally stalled and we ended in familiar territory in the mid 1.28 region. EUR/JPY traded above Y110 briefly but struggled to hold the key level. The risk sentiment continued to be the main driver of currencies as the U.S. dollar closely tracked equity movements. U.S. equities ended with positive note reducing the safe haven demand. Immediate resistance comes at 1.2877 levels (100 days daily EMA). It is holding near the important support of 1.2700 levels (trend line support in daily charts) with a short term bearish bias. Breaking of 1.2700 levels in Euro and upside break of 83.45 in dollar index would bring further bearish pressure on Euro. Medium term Neutral.

The Sterling found support at the 1.5500 level before staging a solid rally on the back of the MPC minutes which once again showed one member voting for a rate hike in the UK at the last August meeting. The BOE kept its key rate unchanged. GBP/USD is currently trading at 1.5570. The big move came in the EUR/GBP which rallied back towards 0.8300 after heavy selling last week. Sustained trading below these levels would indicate that whole rise from 1.4230 in GbpUsd has finished earlier than we thought and will bring deeper fall to 1.5123 cluster support (50% retracement of 1.4230 to 1.5997 at 1.5114). On the upside, break of 1.5997 is needed to confirm rally resumption. Otherwise, risk will now remain on the downside. Medium term Neutral.

The Japanese Yen talk of solid semi official USD/JPY buy orders at Y85.20 kept the market well supported on dips and finished unchanged on the day. GBP/JPY buying supported but AUD/JPY was a drag on the market. While Japan's central bankers don't think the yen's rise poses an immediate threat to the economy, they are ready to consider additional monetary steps if the currency surges higher or if politicians apply more pressure for action . USD/JPY is currently trading at 85.65. The pair would be moving towards a 87 levels soon. Medium term : Yen bearish towards 87-88 levels.

The AUDUSD was hurt by the change in mood in the US session with weakness in some commodities and uncertainty surrounding the Australian Election on Saturday prompting a pullback. AUD/USD made a 2-day low at 0.8944 and bounced slightly to current levels of around 0.8961. The pair failed to break above key 0.9080 as some coveing was seen ahead of upcoming elections in Australia this Saturday. The pair could move till 0.8500-8700 levels where buying could be initiated. Medium term Bullish. Medium term Bullish.

Gold is currently trading at $1229 levels and touched one and half month high of $1232 levels yesterday. Immediate support comes at $1204 levels. Buying can be initiated around these levels. Medium Term- Bullish.

Dollar Index managed to hold above 80 cluster level and rebounded strongly since then. The development reaffirmed our original view that fall from 88.70 was merely a correction to medium term rise from 74.19 only. We'll stay bullish in dollar index as long as 82.11 support holds and expect a test of 83.45 cluster resistance (38.2% retracement of 88.70 to 80.08 at 83.37). Decisive break there will confirm that whole fall from 88.70 has completed and should bring further rise to 85.40 at least. However, break of 82.11 support will dampen the immediate bullish view and turn outlook to neutral first. Medium term Bullish on break of 83.45.(DI - 82.48)