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Improved Risk sentiments and lower crude oil to Support Rupee - HDFC Securities 

Indian rupee expected to open slightly higher amid improved risk sentiments, lower crude oil and foreigners buying in domestic equities. The greenback fell against most of its G-10 peers as gains in U.S shares lifted risk-sensitive. The forward market indicating USDINR could open 10 paise lower from previous close at domestic bourses.

On Tuesday, Rupee declined 0.1% to 76.19 a dollar. It has broadly traded in range during first half but as crude oil prices retreated in afternoon rupee take an opportunity to claw-back earlier losses. Spot USDINR will likely trade around the 76 level and to take cues from movement of crude oil prices rather than risk-sentiments.

Fitch Ratings on Tuesday slashed India's growth forecast for the next fiscal year to 8.5% from 10.3%, citing sharply high energy prices on account of the Russia-Ukraine war.

Stocks in Asia climbed Wednesday after the Federal Reserve’s resolve to clamp down on inflation helped fuel gains on Wall Street while deepening a Treasury selloff. US Treasury’s got no relief however, with bear-steepening action predominating as the long bond jumped nine basis points to 2.61% and the two-year ticking to 2.16%, up five basis points on the session.

USDCNH 1-year forward points have further to fall on expectations for FedPBOC policy divergence, which may make it cheaper for overseas investors to short offshore yuan. Yuan 1-year forward points fell as much as 126 pips on Tuesday to 815 pips, the lowest since May 2020.

USDINR

Technical Observations:

USDINR March futures formed bearish candle but stayed above short term moving average of 21 days exponential moving average

Relative Strength Index of 14 days period oscillating around 50 indicating consolidation in near term

Derivative price actions indicated long unwinding as price fell along with open interest and volumes.

MACD has given negative cross over but remained above zero line.

ADX line weaken and placed below center line of 25 while +DI stayed above –DI indicating continuation bullish trend.

USDINR March futures bias remains bullish as long as it holds 75.70 while on higher side resistance placed at 76.50.

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