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Dollar Edges Higher As Fed Remains Hawkish - HDFC Securities 

● Indian rupee expected to trade sideway to bearish after depreciating in last four months amid higher crude oil prices, geopolitical uncertainties, stronger dollar index, risk-off sentiments and foreign fund outflows.

● So far this year, rupee has depreciated 2.82% to 76.43 a dollar. India’s forex reserves dip from $633.61b to $600.42b following central bank interventions. Foreign institutions have sold worth $18bn equities and debt. Technically, the pair is having support at 75.70 and resistance at 77 odd levels.

● Dollar index posted its best monthly gain since 2012 to settle at 102.96. The technical indicator hinting at a near term peak as market is already priced in for higher interest rate going ahead.

● Risk assets plunge to level seen at the Ukraine-Russia war lows, dollar index is hovering near 22 year high while treasury yields just couple of bps away from 3%. Fed’s in tightening mood to curtain inflation even after contraction in US real GDP contracted in 1Q and China’s economy is slowing and PBOC planning for liquidity easing.

● Fed policy pricing has again reached a new hawkish peak in the aftermath of Friday’s data, as the bid in policy-meeting swaps is starting to lean toward a 75- bp move in June. For the May meeting, a 50-bp hike has remained firmly lockedin but now there is currently a 45% chance that the move after this will be a 75- bp rise.

● May could be the month of consolidation after surging around 5% in April. Seasonality indicating bullish May month but as the price action of April month diverged from last ten years down move, May month could also be different from history.

USDINR

Technical Observations:

● USDINR May futures forming rounding bottom on weekly chart.

● It has been forming higher highs and higher lows on daily and weekly chart.

● The pair has been holding short term moving average support on daily and weekly chart. Short term moving averages are placed well above medium term moving averages.

● Momentum oscillator, Relative Strength Index (RSI) 14 weeks heading north indicating continuation of positive momentums.

● MACD has been placed above zero line with positive cross over indicating bullish trend.

● USDINR May futures expected to head towards life higher of 77.50 while on downside it will find support around 75.50

EURINR

Technical Observations:

● EURINR May futures heading south and placed well below long term moving averages.

● The formation of lower top lower bottom on weekly and monthly charts well supported bearish trend.

● The pair is having resistance in the range of 84.10 to 85.40 while on lower side slide below 80 could open for 78 odd levels.

● Momentum oscillator, RSI of 14 weeks entered in oversold zone indicating continuation of downward momentum. MACD also heading south suggesting bearish trend.

● We continue to hold bearish view in EURINR May futures. However currently level might not offer best risk rewards so we will wait for short covering bounce up to 84.50 and keep stop above 86 level.

GBPINR

Technical Observations:

● GBPINR May future has took support at 200 weeks simple moving average i.e. 95.63.

● The pair has given death cross over by 50 weeks moving average broken the 100 weeks moving average.

● Momentum oscillator, RSI on weekly chart entered in oversold zone indicating continuation of bearish trend.

● ADX line has crossed +DI upward indicating sharp downward movement in coming weeks.

● MACD has been placed below zero line and heading south indicating bearish trend.

● Technical evidences suggesting consolidation in coming weeks. GBPINR April futures expected to trade with in the range of 104 to 99 with bearish bias.

JPYINR

Technical Observations:

● JPYINR May futures steadily fell in last eight weeks. Yen plunges to a 20 year low due to policy divergence between Fed and BoJ.

● The pair has been given death cross over on weekly chart by 50 weeks MA breaking 100 weeks MA.

● Momentum oscillator, Relative strength index of 14 weeks entered in oversold zone and currently placed at 20. However, the price and oscillator both indicating continuation of downward momentum.

● MACD has been placed below zero line with negative cross over and histogram bars are rising indicating bearish trend.

● Due to highly oversold condition on weekly and daily chart there are chance of short covering bound in coming week while trend remains bearish.

● The pair is having support at 56.20 and resistance at 61.50 and 65.70

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