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Rupee To Trade In Narrow Range In Holiday Truncated Week - HDFC Securities 

Last Week, Indian rupee depreciated against American dollar on broad based strength in greenback. However, the pace of decline relatively lower amid fall in crude oil prices, foreign fund inflows and recovery in domestic equities. Near term direction for rupee will be driven by flows as market is already price in geopolitical uncertainty, hawkish federal reserves and higher inflations following surge in commodity prices.

Spot USDINR gained 12 paise or 0.16% to 75.91 in the week gone. In a holiday truncated week, spot USDINR is expected to trade in the range of 76.15 to 75.70. The directional trend remains bearish as long as it trades below 76.15.

From the data dockets, most of the nations will publish inflation and industrial production data and ECB will be meeting for rate decision. Indian markets will have only three trading sessions following Mahavir Jayanti on 14th April and Good Friday on 15th April.

The greenback is firing on all cylinders. The dollar has been on an upswing ever since Russia’s invasion of Ukraine as rising energy prices weigh on the euro and yen and, simultaneously, lift U.S inflation expectations. The dollar gained for a seventh day and the global bond rout deepened after Goldman Sachs Chief Economist Jan Hatzius said the Fed may need to hike rates past 4% to cool an over-heated economy. Dollar expected to consolidate this week after hitting century in previous week.

In FX, flow was mixed but skewed towards dollar selling. Specs bought AUD (12.1k), CAD (8.5k), EUR (6k), and MXN (9.2k) while selling modest amounts of yen (1.7k), sterling (1.7k), and Swiss (a little under 1k.) The aggregate dollar long fell by roughly $2.3 billion

USDINR

Technical Observations:

USDINR April futures took resistance at descending trend line around 76.20.

The pair has been placed below short term and medium term moving averages.

Momentum oscillators, Relative Strength Index of 14 days hovering near 50 with downward direction indicating weaker momentum.

MACD has been placed below zero line and histogram making negative bars indicating weak trend.

Options distribution skewed towards left with maximum pain at 76 strike indicating weakness.

The above evidences indicating bearishness in USDINR April futures with downside support around 74.70 and resistance at 76.30.

EURINR

Technical Observations:

EURINR April futures closed at multi year low and placed well below short term and long term moving averages.

The pair has been forming bearish formation of lower top lower bottom formation on major time scale.

Momentum oscillator, Relative Strength Index of 14 days entered in oversold zone and gap between RSI and RSI average are widening indicating weaker momentum.

MACD and ADX also supporting bearish trend and momentum.

Oversold condition on weekly and daily chart indicating short covering in coming days while trend remains bearish.

EURINR April futures is having resistance at 84.10 and support at 81.50.

GBPINR

Technical Observations:

GBPINR April futures has been trading with lower top lower bottom with downward slopping trend line resistance at 100.50.

The short term moving averages placed below medium term moving averages suggesting short term down trend.

Directional Movement index showing weakness with +DI placed below –DI and ADX line is heading north indicating strong bearish trend.

Momentum oscillator, RSI has been placed at 35 and oscillating below 50 indicating weaker momentum.

GBPINR April futures expected to trade lower with support around 98 and resistance at 100.50. Short covering bounce will be used to make fresh short keeping stop loss above 101.

JPYINR

Technical Observations:

JPYINR April futures witnessed steady fall since March and trading in downward channel.

The pair is placed below short term and medium term moving averages.

Momentum oscillator, Relative strength index has been hovering in oversold zone with positive divergence but price action needed for clear trend reversal.

MACD has been placed below zero line indicating weaker trend.

Directional movement index is indicating weak bias as –DI is placed above +DI and ADX line placed at 46 level.

Overall trend remains bearish and any short covering bounce will be used to make fresh short sell. The pair is having support at 60.50 and resistance at 63.15.

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