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Rupee to Depreciate as Odd favours FOMC Rate Cut - HDFC Securities
* Indian rupee fell for the second week amid strength in dollar against major currency in expectation of interest rate cut and foreign funds outflow from domestic market. Spot USDINR is expected to move higher towards 69.25, the descending trend line resistance adjoining 70.52 and 69.98, while recent bottom of 68.29 can act as support.
* Asian Development Bank has lowered the inflation forecast for India during the current financial year to 4.1%, on the back of gain in rupee and cut in the country's GDP projection. India will be the main driver to lower the inflation for the South Asian region, ADB said in a supplement to Asian Development Outlook (ADO) 2019.
* Overseas investors sold worth $1,038.1 m in domestic equity while bought $1092.7m month to date.
* Most emerging Asian currencies edged lower as a stronger dollar as market betting for half-point rate cut by the Federal Reserve this month.
* St. Louis Fed President James Bullard downplayed talk of an easing cycle and said he favored a quarter-point cut.
* Oil expected to gain as tensions remained high in the Middle East after Iran seized a British tanker in the Straits of Hormuz on Friday, and Libya’s largest oil field declared force majeure after interference by an unidentified group shut down production.
* U.K. Prime Minister Theresa May’s successor is announced on Tuesday, with Boris Johnson expected to become the new Conservative leader and PM.
* Thursday brings the European Central Bank policy decision. Market widely expect officials to signal their readiness to cut interest rates and potentially broaden stimulus. Some see the chance of an immediate rate cut. ECB President Mario Draghi holds a briefing afterward.
USDINR JULY FUT. TECHNICAL OUTLOOK
USDINR July Futures : Short Covering Bounce USDINR
* July futures expected to witness short covering bounce.
* The pair closes above short term moving average of 8 days.
* Momentum oscillator, RSI is forming positive divergence and exiting from the oversold zone indicating short covering bounce.
* The pair likely to face resistance around 69.40 and support at 68.38. Medium term trend in USDINR July future will turn bullish only above 69.50.
EURINR JULY FUT. TECHNICAL OUTLOOK
EURINR July Futures: Hold Short Sell, SL 78.80 Target 76.70
* EURINR has been forming lower highs and lows on daily and weekly chart.
* Momentum oscillator, RSI is consolidating below center line.
* The medium term outlook for EURINR July future is bearish with sell on bounce.
* Bias for the pair remains bearish with downside immediate support at 77.48 and 76.70.
GBPINR JULY FUT. TECHNICAL OUTLOOK
GBPINR July Futures: Buy above 86.70 SL 85.50 Target 88.30
* GBPINR has formed higher high, first sign of reversal. Once the higher low forms, it will confirm the trend reversal.
* Momentum oscillators exited from oversold zone and formed positive divergence indicating reversal.
* Short term traders can initiated buy above 86.70 for target of 88.30 keeping stop loss at 85.50.
* GBPUSD has a falling channel with resistance at 1.2582. Oscillators are also turning bullish with positive divergence and exiting from oversold zone.
JPYINR JULY FUT. TECHNICAL OUTLOOK
JPYINR July Futures: Sell at 64.80 SL 65.40 Target 63.50 JPYINR
* July futures forming lower high and low on daily chart.
* It has been forming bearish head and shoulder pattern. Momentum oscillator RSI is heading towards overbought zone with positive cross over.
* JPYINR is having support at 63.25 and resistance at 64.80.
* Short term bias for JPYINR July futures remain bearish with down side support at 63.25 and 62.90.
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HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475
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