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Dollar Steady Ahead of Fed Meeting - HDFC Securities 

With risk assets on front footing, dollar is steady and crude is down, rupee expected to open slightly higher. The strength in Chinese yuan could also support regional currencies. The focus will remain on today’s FOMC meeting outcome and statement. The Fed is expected to hike by 25bps., first time since 2018, to fight high inflation is widely anticipated. Chairman Powell will have to balance faster inflation against risks from the war in Ukraine.

On Tuesday, spot USDINR gained 5 paise to 76.61 on back of risk-averse sentiment and foreign fund outflows. However, the range remained narrow on back of fresh cues. Technically, the pair is having support around 76.40 and resistance at 76.80.

An Asia-Pacific share gauge snapped a three-day drop and a Hong Kong index of Chinese tech firms added about 5%. The S&P 500, Nasdaq 100 and European futures were steady following a Wall Street advance on Tuesday.

Dollar steady around 99 odd level ahead of the expected quarter-point Fed hike on Wednesday. U.S. data showed producer-price inflation at 10%, underscoring inflationary pressures.

West Texas Intermediate crude pared recent losses but remained below $100 a barrel. Signs that Iran nuclear talks may resume point to the possibility of more supply, while Covid lockdowns in China may curb demand

Russia has begun the process of paying $117 million in interest on dollar bonds Wednesday. But a default seems highly likely because of sanctions and Russian decrees that are likely to prevent dollar settlements

USDINR

Technical Observations:

USDINR March futures formed another Doji candlestick pattern on daily chart indicating continuation of consolidation after recent rally.

The pair has been trading well above short term moving averages.

Relative Strength Index of 14 days period placed at 63 and flattening indicating lackluster momentum.

Oscillator stochastic has given negative cross over and about to exit from overbought zone indicating near term weakness in the pair.

Derivative price actions indicated continuation of long unwinding with fall in price, open interest and volume.

USDINR March futures likely to consolidation in the range of 76.30 to 76.90 range.

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