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Dollar retreats as Biden signs stimulus bill -  HDFC Securities

Indian rupee expected to open higher after yesterday’s holiday. The forward market suggesting 20 to 25 paise higher opening for Rupee vs American dollar. On Wednesday, spot USDINR closed at 72.91 down 2 paise from previous close. Near term trend for USDINR remains bearish with downside support at 72.60 followed by 72.42 while on higher side 73.44, the 100 DMA will act as strong resistance.

Market will eye on today’s industrial production and inflation data for as slower growth and higher inflation could dent the central bank’s dovishness. The Bloomberg consensus suggests IIP estimated to came at 0.9% vs prior 1% while inflation may rise to 5% from previous 4.06%.

The dollar extended its losses to a one-week low as American stocks surged after President Joe Biden signed the U.S. Covid-19 relief bill into law. A gauge of the dollar headed for its third session of losses, falling to the day’s low after the 30-year Treasury auction on indications that demand from foreign accounts was soft, crimping demand for the greenback. An auction of $38 billion in benchmark 10-year Treasury notes was not as bad as feared as underlying inflation remained muted, helping push yields down to a session low of 1.506% before closing at 1.52%, compared to 1.61% earlier this week.

The OECD said this week that President Biden’s coronavirus aid package will add about one percentage point to global economic growth in 2021 and America’s growth rate was revised up to 6.5% from 3.2%.

Euro pared gains earlier after the European Central Bank pledged to ramp up its government debt purchases to contain rising bond yields. Euro zone bond yields fell after the European Central Bank said it was ready to accelerate money-printing to keep a lid on euro zone borrowing costs, using its 1.85 trillion Pandemic Emergency Purchase Program (PEPP) more generously over the coming months to stop any unwarranted rise in debt financing costs.

Technical Observations:

USDINR

USDINR March futures closed below short term moving average and formed lower high on hourly chart suggesting short term weakness.

The pair closed below Engulfing candlestick suggesting bearishness.

Momentum oscillators and indicators turned weak on hourly and daily time frame.

USDINR March futures expected to open lower and head towards 72.80 and 72.60 levels while on higher side resistance moved lower from 74.45 to 73.60.

Near term outlook for USDINR March futures remains bearish until it closes above 73.60.

USDINR March Daily Chart

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