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RBI Policy to Direct Rupee - HDFC Securities 

• Indian rupee expected to open slightly higher ahead of central bank’s monetary policy decision. The forward market indicating USDINR could open 7-8 paise lower at domestic bourses. However, the direction will be decided by the RBI policy decision and stance. Market don’t expect any rate change but there could be upward revision of inflation and lowering growth target. Any indication of change in stance from accommodative to neutral becomes rupee negative.

• Rupee traded lower for the second day in row following corporate outflows and risk-off sentiments. Spot USDINR ended with gain of 20 paise or 0.27% to 75.96. The pair is having resistance at 76.20 and support at 75.70. Short term trend remain down while medium term trend is bullish.

• A gauge of the dollar’s strength is higher for a sixth session with the greenback trading broadly higher as the Treasury yield curve steepens, while U.S shares rebound from earlier losses. US Treasury 10-year yields rose 6 basis points to 2.66%, buoyed by corporate activity, Fed comments and jobless claims at lowest level since 1968.

• Asian stocks and U.S. equity futures were steady Friday in cautious trading as investors digested the Federal Reserve’s plan for aggressive policy tightening and monitored China’s Covid lockdowns. Elsewhere, Oil mostly held recent losses, squeezed by plans to release millions of barrels of crude from strategic reserves and China’s demand-sapping virus outbreak.

• Russia-Ukraine news and Federal reserves tightening is now in back seat, forex markets solely depends on risk sentiments for directional trade.

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 given positive crossover and heading north indicating positive momentum.

• Options data indicating maximum pain at 76 strike while call writing at 77 strike indicating near term hurdle around 76.75 to 77 and support around 75.70.

• USDINR April futures likely to be volatile in today’s trade and expected to trade in the range of 76.40 to 75.80.

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