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Dollar and US Yields gain Before US Stimulus - HDFC Securities 

Rupee got a rough ride just day before the financial year end, as it marked biggest one day fall since February 26. Dollar buying from the importers and central bank along with short squeeze pushed USDINR above 100 days moving averages. The rupee was the worst performing currency among Asian currencies. The sharp surge in dollar and US treasury yields also weighed on Indian rupee.

Indian rupee expected to open slightly lower after yesterday’s sharp surge. Technically, spot USDINR is having resistance at 73.85 and support at 72.84.

From the economic events front, India’s federal cabinet to meet today, Govt to release Feb. eight core industries output data, fiscal deficit for April-Feb. and balance of payment for Oct.- Dec. 2020.

Indian currency derivative market will remain closed on 1st and 2nd April on account of Bank Holiday and Good Friday, respectively.

Asian stocks look set for mixed start on the last trading day of the quarter as investors look to more U.S. stimulus, while wary of upward pressure on bond yields. Risk assets may get a small lift from China’s PMIs, which came in above expectations. Manufacturing PMI came in at 51.9 beating consensus by slightly more than 1 standard deviation. Non-manufacturing was even more impressive at 56.3, beating consensus by a very large 5 standard deviations.

The dollar touched the highest level since November, buoyed by surging Treasury yields as investors grow more optimistic the Biden Administration’s expected spending package will undergird economic growth. The yen extended losses past the key 110 level to touch the lowest in a year. Technically, A Tweezer Top on the daily fails to cap as 110 handle gives away on persistent demand for longs; nine-day RSI at 81 level, shows no exhaustion signs just yet.

Technical Observations:

USDINR

USDINR April futures forming bullish Marubozu candles on daily chart, considered as trend reversing pattern.

It has closed took support of 100 Weeks Moving average and expected to face resistance of 50 Weeks Moving average placed at 74.20

Momentum oscillators, Relative Strength Index turned up and placed above 50.

USDINR April futures expected to trade with positive bias after yesterday’s reversal pattern.

The paise has near term support at 73.25 and resistance at 74.17.

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