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Lacklustre Price Action Ahead Of Inflation Data - HDFC Securities 

• Tighter liquidities, higher inflation, stronger dollar index and foreign fund outflows weighing on Indian rupee while lower crude oil prices has given temporary support. On Monday, The pair lacks the direction and swing between 76 to 75.80 range through out the day. Market participants are eyeing on today’s inflation and industrial production data for directional view.

• Spot USDINR gained 6 paise or 0.07% to 75.96 on Monday. Technically, it has been facing psychological resistance at 76 while on downside it is holding support at 75.70.

• A gauge of the greenback’s strength is higher for an eighth day as shares slip and Treasury 10-year yields rise ahead of U.S. inflation data Tuesday, while the yen approaches a two-decade low amid concerns about Japanese growth. U.S. Treasury curve steepened with 10-year yields rising 7 basis points to 2.77%.

• Euro remains volatile following French Elections and ECB decision on Thursday. Central bank tightening wagers accelerated with markets pricing two quarter-point hikes from the ECB by October.

• Stocks in Asia dipped Tuesday and bonds extended a selloff - leaving the US 10-year Treasury yield at the highest since 2018 - as economic threats from high inflation, tightening monetary policy and China’s Covid lockdowns ripple across markets.

• Oil steadied after a tumble that saw crude erase most of the gains sparked by Russia’s invasion of Ukraine. China’s virus outbreaks and mobility curbs, in pursuit of a controversial Covid-zero strategy, are imperiling demand.

USDINR

Technical Observations:

• USDINR April futures touched the 55 days exponential moving average.

• The pair is having descending trend line resistance at 76.20.

• It has been trading in bearish formation of lower top lower bottom.

• Relative Strength Index of 14 days period has been consolidating below 50 and currently placed at 47.

• Options data indicating maximum pain at 76 strike while call writing at 76.50 strike indicating near term hurdle around 76.50 to 76.75 and support around 75.70.

• USDINR April futures likely to remain in range of 75.70 to 76.50 with negative bias. Short term traders should hold sell with SL of 76.30 with downside target of 75.70.

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