Published on 22/07/2020 12:41:45 PM | Source: HDFC Securities Ltd

The pair is expected to trade with negative bias with downside level of 74.15 - HDFC Securities

Posted in Currency Report| #HDFC Securities #Currency Tips

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The pair is expected to trade with negative bias with downside level of 74.15 -  HDFC Securities 

Dollar slides as risk sentiment boosted with EU Recovery deal

* The rupee advanced along with other emerging Asian currencies. Spot USD/INR falls 0.2% to 74.7450 on Tuesday after touching 74.7312, lowest since July 7. The short-term flow picture remains supportive on FDI, acquisition and equity offering related inflows supported Indian rupee. RBI will likely absorb dollar inflows, but it could slow the pace of reserve accumulation in a weak dollar and strong EM currencies environment.

* Rupee one-month volatility dropped to 5.42%, down for a fifth day.

* Global funds bought net 22.7b rupees ($303.7m) of Indian stocks on Tuesday.

* Indian bonds decline the most in a week on concerns the government may expand its borrowings given the dwindling revenues. 10-year bond yield rises 3bps, the biggest advance for a day since July 14, to 5.83% Tuesday.

* One of the dominant themes in the G10 FX markets was the recent high-level negotiations over the EU recovery fund. The agreement on the EU recovery fund (and the EU budget) and the news on progress on a Covid 19 vaccine in Oxford University testing should keep he risk environment supported, with the dollar left struggling against its G10 peers. Last the Dollar index quoted at 95.13 with loss of 0.66% from 95.77 at 5pm IST.


Technical Observations:

* USDINR July Futures broken the short term moving average support. It has formed bearish chart pattern of lower top lower bottom.

* The pair headed towards 74.17, the 50% retracement level adjoining the high of 77.07 and low 71.29.

* Momentum Oscillator, RSI of 14 days period heading towards oversold zone indicating continuation of downward momentum.

* The pair is expected to trade with negative bias with downside level of 74.15. Short term traders should sell on bounce with keeping stop above 75.50.


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