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Lower Crude Oil Prices To Support Rupee - HDFC Securities 

Indian rupee expected to open on flat note following steady trade in regional currencies. Spot USDINR consolidated in narrow range on Monday before closing at 76.57 with loss of 3 paise. Technical set up remains bullish with downside support around 76.30 and resistance at 76.70. Near term focus will remain on crude oil prices and FOMC rate decision as foreign fund selling in equities started exhausting.

A volatile trading environment sent a gauge of the dollar’s strength higher as stocks fell with investors assessing the latest geopolitical developments.

U.S. and Chinese officials conducted a “substantial discussion” of the Russian war against Ukraine in their first high-level, in-person talks since the invasion

The sharp decline in stocks pushed the Nasdaq 100 into bear market as it has a 21% drawdown from its Dec. 27 close. Traders have boosted their expectations for the amount of Federal Reserve policy tightening that could occur this year, moving at one stage on Monday to fully price in seven standard quarter-point rate hikes.

PBOC kept 1-year medium-term lending facility at 2.85% vs market expectation of 2.75%.

US 10-year yield continues to head north, reaching 2.14% today - its highest level since July 2019. Crude oil is having another down day with WTI futures extending losses below $100 a barrel. The dimming outlook for economic growth in China is adding a fresh headwind amid Covid-induced lockdowns. China placed 17.5 million people in Shenzhen under a lockdown for at least a week amid a surge in Covid-19 infections

USDINR

Technical Observations:

USDINR March futures formed Doji Candlestick pattern on daily chart indicating indecisiveness.

The pair has been trading well above major moving averages.

Relative Strength Index of 14 days period placed at 64 and flatten indicating consolidation

Derivative data indicates short covering as we have seen rise in price and fall in open interest and volume on Monday.

Holding of higher highs and lows and positive momentum indicating continuation of up trend.

Near term bias remains bullish USDINR March futures with higher-side resistance at 77.50 and support at 76.30.

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