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Dollar Holds Gain After Fed Minutes- HDFC Securities

* Indian rupee expected to open with minor upside following foreign fund inflows. Rupee remained resilient to dollar movement following stronger dollar inflows backed by higher carry and rebound in economy. The one month forward USDINR last quoted at 73.01 with 4 paise losses from yesterday’s 5pm (IST) hinting for weak start.

* On Wednesday, Rupee ended at day’s high to close at 72.75 with gain of 5 paise a dollar.

* Technically, spot USDINR’s primary trend remains bullish until it closes above 73.50 while in near term we could see a range bound movement between 72.40 to 72.90.

* The dollar remained higher for a second day and outperformed most of its Group-of-10 currency peers even as minutes of the Federal Reserve’s latest policy meeting showed officials didn’t see the necessary conditions to initiate tapering for some time. The U.S. economy started 2021 with a bang as retail sales and factory output accelerated and expectations continue to build for another jolt of government stimulus, setting the stage for what could be the best year of economic growth in nearly four decades.

* US Treasury 10-year yields slipped from roughly one-year highs, while the yield curve erased much of the day’s flattening move after the U.S. sold $27 billion in 20-year notes at a higherthan-expected yield.

* Asian stocks looked set for a muted open after a mixed session from their U.S. peers as investors weighed strong retail sales against concerns about inflation. Treasury yields retreated from a one-year high. Futures were little changed in Japan and India and dipped in Australia and Hong Kong. Elsewhere, oil rose for a third session and Bitcoin jumped past $52,000.

USDINR

USDINR February futures closed at days low and slightly below doji high suggesting weakness .

The pair has 20 Days moving average resistance at 73.07.

Momentum oscillators on daily and weekly chart are in oversold territory suggesting consolidation before trend change.

Momentum indicators also suggesting down trend in the pair

We remain bearish in USDINR February futures until 73.25 surpasses while on down side we expect 72.60 and 72.40 in near term.

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