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Market Skewed towards Stronger Dollar - HDFC Securities 

Indian rupee depreciated 40 paise to 76.21 a dollar amid stronger dollar index, higher crude oil prices and risk averse sentiments. The near term bias for USDINR remains bullish as long as it trades above 75.70 while on higher side 76.60 will act as strong resistance

India’s foreign exchange reserves dropped for the second week to the lowest since August 2021 in a sign that the central bank might have sold dollars to prop up the rupee. The stockpile for the week ended March 18 fell by $2.6 billion to $619.7 billion.

Dollar bid well in the week gone by following hawkish Federal reserves and risk averse sentiments. Federal Reserve Chairman Jerome Powell once again pulled off his signature trick of persuading markets that the hawkish statement they had just read wasn’t all that hawkish after all. Last week Powell and other Fed officials pointed out that actually they are thinking about 50-bp hikes, and possibly a train of them. Eurodollar traders are now pricing two half-point hikes over the next three meetings.

At less than $3 trillion, the amount of negative-yielding debt is the lowest since October 2015, down from more than $18 trillion in late 2020 and more than $10 trillion as recently as Dec. 31. All these indicating higher rate in near future as commodity prices shown parabolic up move in last couple of months.

The CFTC data skewed towards dollar buying, with specs notable sellers of yen, sterling while buyer in euro. Still, that did little to offset the increase in dollar length - the aggregate dollar long rose by $4.5 billion on the week.

USDINR

Technical Observations:

USDINR April futures oscillating around 20 days simple moving average (DSMA) line.

Short term moving averages are placed above medium term moving averages indicating overall up trend.

The pair has been holding higher top higher bottom formation on daily chart

Momentum oscillators, Relative Strength Index of 14 days exited from overbought zone but remain above 50 indicating near term consolidation.

The pair is expected to show wild swing ahead of financial year end.

USDINR April futures has support in the area of 76 to 76.15 range while on higher side psychological level of 77 acting near term hurdle.

EURINR

Technical Observations:

EURINR April futures taken resistance at downward slopping trend line adjoining 86.40 and 85.18 while on downside it has support around 84.15, the horizontal trend line adjoining previous to bottom 84.06 and 84.10

The pair has been trading well below short term moving average of 20 DSMA.

Momentum oscillator, Relative Strength Index of 14 days flatten below 40 indicating consolidation in the pair

MACD is placed below zero line and smaller histogram bar indicating convergence in the pair

EURINR April futures expected to give upward breakout above 84.70 while breaking of 84.15 will confirm fresh break down and it could head towards 83.50 or even 83.10 level.

GBPINR

Technical Observations:

GBPINR April futures has been treading bearish with lower top lower bottom on daily time frame.

It has strong resistance at 101.58, the 50 days simple moving average. The short term moving averages placed below medium weak trend.

Directional Movement index showing weakness with +DI placed below –DI and ADX line placed below 25.

Momentum oscillator, RSI has been placed below 50 level indicating bearish momentum.

GBPINR April futures expected to trade lower with near term support at 100.10 and falling below could open 99.50. The bias remains bearish as long as pair stays below 101.60 level.

JPYINR

Technical Observations:

JPYINR April futures formed Doji Candlestick pattern outside the lower band of the Bollinger band indicating extreme oversold conditions

Momentum oscillator, Relative strength index has been placed below zero line indicating continuation of bearish momentum.

MACD has been placed below zero line with negative cross over indicating weaker trend.

Directional movement index is indicating weak direction as –DI is placed above +DI and ADX line placed below 25 level

The above technical evidences suggesting bearish trend in JPYINR April futures any short covering bounce around 64.35 will be used to make fresh short sell for target of 62.50 and more.

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