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Rupee Gyrating Around Psychological Level Of 75

• Indian rupee could open flat following muted price action in the dollar index in overnight trade. Stocks in Asia climbed on Friday, supported by the possibility of major stimulus in China as well as hopes that policymakers can get inflation under control without causing a global economic downturn. China may let local governments sell 1.5 trillion yuan ($220 billion) of special bonds in the second half. Such outlays could aid commodities like metals and oil, which traded near $102 a barrel.

• Spot USDINR is expected to consolidate in the range of 79.30 to 79. While the medium-term outlook remains bullish, in the short term we could see long unwinding following a recovery in domestic equities and expectation of dollar inflows after the slew of measurestaken by the government and central bank.

• The dollar fell versus most of its Group-of-10 currency peers, as recession fears from inflation and monetary tightening faded and Treasuries retreated. The pound jumped after UK Prime Minister Boris Johnson resign while staying on as caretaker prime minister until October.

• While the euro slumped to a fresh 20-year low versus the dollar, the market braces for a move to parity in the coming months. EURUSD was down 0.2% to 1.017 after earlier dropping to 1.0144.

• Meanwhile, two Federal Reserve policymakers pushed back Thursday against fears of a recession as monetary settings tighten. Governor Christopher Waller and St. Louis Fed President James Bullard backed the need for restrictive policy to curb price pressures but argued the US can avert a contraction.

Technical Observations:

• USDINR July futures formed candle with small body indicating indecisiveness.

• The pair has been trading in a bullish sequence of higher top higher bottom on major time frames.

• It has been holding support of 13 days exponential moving average at 78.97.

• Relative Strength Index of 14 days hovering in overbought zone and placed below average line indicating weakness in the momentum.

• +DI is placed well above –DI and ADX line strengthening indicating a bullish trend. However, the spread between +DI and –DI is narrowing due to weakness in +DI indicating bulls are losing.

• USDINR July futures is likely to trade in the range of 79.40 to 78.90.

USDINR July Daily Chart

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