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Currency Outlook

Rupee Outlook

* Rupee appreciated marginally yesterday amid soft dollar and retreat in US treasury yields. Meanwhile, sharp gains were prevented due to dollar demand from importers.

* Rupee is likely to appreciate further today amid weakness in dollar, softness in US treasury yields and rise in risk appetite in the global markets. Dollar and yields moved south as US business activity cooled in April to a 4-month low due to weaker demand. Manufacturing PMI data showed activity in sector contracted in April and Services PMI signaled slowdown in sector. Additionally, pace of inflation eased from 6-month high seen in March despite of rise in input cost. Meanwhile, surge in crude oil prices may prevent sharp gains in rupee. USDINR April likely to slip towards 83.19 level (89-Day EMA) as long as it stays below 83.42 level (10-Day EMA).

Euro and Pound Outlook

* Euro rallied by 0.44% yesterday amid weakness in dollar and rise in risk appetite in the global markets. Further, euro gained strength on improved economic data from euro zone. Composite PMI climbed more than expected to an 11-month high. For today, EURUSD is likely to hold the support near 1.0690 level (10-Day EMA) and rise towards 1.0730 levels (20-Day EMA) amid weakness in dollar, optimistic global market sentiments and expectation of improved economic data from Germany. If pair breaks above 1.0730 level then it may rally further towards 1.0780 level (50-Day EMA). EURINR April is likely to rise towards 89.50 levels (200-Day EMA) as long as it trades above 88.90 levels.

* Pound is expected to find the floor near 1.2430 level and rise towards 1.2510 level (20-Day EMA) amid weakness in dollar and as British businesses recorded their fastest growth in activity in nearly a year. GBPINR April is likely to rise further towards 104.00 level as long as it stays above 103.30 levels

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