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Dollar Soars on Risk-Aversion

* The Indian Rupee could start the day on the backfoot following overnight strength in the dollar index, higher crude oil prices and risk-averse sentiments. Asian currencies are mixed against the dollar in the Asian morning sessions but could weaken amid risk-off sentiment spurred by losses in regional equity markets.

* Indian 10-year yields rose 1bp to 7.27% after climbing to as high as 7.31% intraday.

* On Monday, spot USDINR gained 9 paise to 79.87, gaining the fourth day in trot. Technically, the pair is in an uptrend and crossing the psychological level of 80 will push it towards the 80.50 to 80.70 range while near-term support would be in the range of 79.40 to 79.25.

* The euro slid to its lowest level in two decades as higher gas prices continued to plague the common currency. The European Central Bank is under rising pressure to stave off a recession, which could pull support from under the already-suffering euro. The offshore yuan slid as the country looks to help a flagging property market.

* Asian stocks retreated after worries about Fed tightening saddled Wall Street with its worst drop in two months. US Yields rose after a report showed national economic activity unexpectedly rebounded in July. US Treasury two-year yields rose 10 basis points to 3.34% and the US 10-year topped 3.0% for the first time in a month.

* OPEC+ may be forced to reduce output when it meets next month, Saudi Energy Minister Abdulaziz bin Salman said. "Extreme" volatility and a lack of liquidity mean crude futures are increasingly disconnected from fundamentals of supply and demand, he said. WTI rose. So far this month, prices have swung wildly within a range of about $13.

USDINR

Technical Observations:

• USDINR August futures closed above short term moving average but formed bearish candle as it has been facing psychological level of 80.

• The pair is having support at 79.68, the 21 days exponential moving average.

• Relative Strength Index of 14 days hovering around 50 indicating sideway momentum.

• MACD is placed above zero line but flatten indicating consolidation.

• Long unwinding has been seen as price decline with open interest and volume rises.

• USDINR August futures could consolidate in the range of 79.30 to 80.35 in the near term.

• Medium-term trend remains bullish as long as the pair trades above 79 while on higher side 80.40 and 81 will be on card.

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