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Rupee Heads For Second Weekly Decline - HDFC Securities 

• Indian rupee expected to open slightly higher after recovery in risk assets and Asian currencies. On Thursday, spot USDINR made a lifetime high of 77.63 before closing at 77.43 with gains of a quarter percentage point. The central bank’s intervention restricted the intraday losses in the rupee while the direction remains down as long as it trades below 76.70 while on the lower side falling below 77.70 opens 78 and 78.30 levels.

• After market data of inflation were disappointing as India’s headline inflation accelerated for a seventh month to the fastest since May 2014 on higher fuel and food costs, spurring expectations the central bank will raise rates further to tame prices. Consumer prices increased 7.79% in April, compares with 7.42% and 6.95% the previous month.

• Industrial outputrose by 1.9% year on year in March, up from1.7% in February.

• The dollar extended its rally, driving the Swiss franc to parity with the US currency for the first time since 2019 and sending the euro to a five-year low. The yen also climbed to its highest level since April as investors took a cue from a rally in bonds and pushed into lower-risk currencies on concern about risks to global economic growth.

• The pound slides to 1.2176, its lowest level in nearly two years, pressured after the Bank of England warned that UK interest rates would continue rising even as the country posted an unexpected fall in GDP, raising concerns that the country may fall into recession while inflation rages.

• Stocks and U.S. equity futures rose Friday amid a bout of calm in global markets after Federal Reserve Chair Jerome Powell again pushed back against speculation of more aggressive interest-rate hikes. Powell reaffirmed the Fed is likely to raise rates by a half-point at each of its next two meetings and isn’t “actively considering” a 75 basis-pointmove.

USDINR

Technical Observations:

• USDINR May futures took resistance at 77.73, the 76.4% Fibonacci extension level adjoining low 74.38, high 77.33 and low 75.46.

• Formation of double Doji candlestick indicating indecisiveness among traders.

• The pair has been trading in a rising channel with resistance around 78.30, and support at 75.50.

• Relative Strength Index of 14 days period heading north indicating positivemomentum.

• USDINR May futures could trade lower in today’s session with downside support at 77.30 and resistance at 77.75. The medium-term trend remains bullish as long as the pair holds 76.70 while on the higher side it has a stiff resistance at 78.10.

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