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Higher Crude Oil And Fund Outflows To Weigh On Rupee - HDFC Securities 

Rupee expected to open slightly higher following overnight weakness in dollar index and rebound in risk assets ahead of Russia-Ukraine talks later today. However, higher crude oil prices and foreign fund outflows continues to weigh on rupee.

Asian stocks may get a boost from a Wall Street rally after Powell backed a measured interest-rate liftoff while market was pricing in for 50bps there could be only 25bps after his comments.

On Wednesday, spot USDINR closed with gains of 37 paise or 0.5% to 75.71 on back of higher crude oil price and weaker domestic equities. Central bank may have intervened aggressively in USDINR otherwise it would have gained more

India’s trade deficit for February came at $21.19b compared to a $13.12b last year as imported $55.01b and exported $33.8b worth of goods and services

The greenback fell, reversing gains from earlier in the day, as U.S. shares advanced after Federal Reserve Chair Jerome Powell said the economy can withstand tighter monetary policy and that he will be careful when removing stimulus. EURUSD reversed losses amid short-covering ahead of Russia-Ukraine talks Thursday.

Powell in testimony to U.S. lawmakers backed a measured Fed interest-rate liftoff and vigilance on inflation, while indicating the world’s biggest economy can weather higher borrowing costs.

On geopolitical front, Russia’s claim to have captured the port city of Kherson in southern Ukraine makes it increasingly clear that its invasion, while slowed in the north, is gaining traction in the country’s coastal plains.

USDINR

Technical Observations:

USDINR March futures formed “Doji candlestick” pattern above upper band of the Bollinger Band, indicating exhaustion by bulls. However, for reversal the price needs to fall below 75.77.

Near term USDINR March futures has support at 75.40 and resistance remains around 76.10

Relative Strength Index of 14 days period placed at 64.54 and heading north indicating bullish momentum

Derivative price actions indicated fresh long position following rise in volume, open interest and volume.

USDINR March futures expected to trade in the range of 75.40 to 76.10 range. We could see long unwinding if prices falls below 75.77

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