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Rupee expected to open with dip cuts

* Indian rupee expected to open, after Wednesday’s holiday of Republic day, dip cuts following risk averse sentiments. Surge in dollar index, crude oil prices and weaker risk sentiments after FOMC hawkish comments could weigh on local currency. The looming Fed tightening has spurred a selloff in stocks and bonds.

* U.S. equity futures and Asian stocks retreated Thursday as investors digested Federal Reserve Chair Jerome Powell’s signal of a March interest-rate liftoff and the possibility of unexpectedly aggressive tightening.

* The forward markets indicating USDINR could open with gain of 25-30 paise and expected to head higher looking at the blood bath in global equities.

* Spot USDINR on Tuesday ended at 74.78 with gain of 21 paise, marked strongest closing of the month. Technically, the pair has been turning bullish by holding support of 74.30 while on higher side 75 remains biggest hurdle for the time being.

* The dollar saw a broad rally after the Federal Reserve suggested it remains on course to raise interest rates in March and left open the possibility for a faster pace of tightening. Fed Chair Jerome Powell said the central bank didn’t rule out moving at every meeting citing the bank needs to be “nimble” to deal with accelerating inflation. Swaps traders are now pricing in around 30 basis points of tightening at the next central bank gathering in March.

* U.K. Prime Minister Boris Johnson said he has no intention of resigning as he awaits the outcome of an investigation into parties held that broke the government’s pandemic rules.

USDINR January Daily Chart

Technical Observations:

* USDINR February futures on hourly chart heading towards upper band of the Bollinger i.e. 75.35.

* The pair has now resistance at 75.30, the 55 DEMA.

* Momentum oscillator, Relative Strength Index of 14 hours heading north and currently placed at 68.

* MACD has been placed above zero line on hourly chart and heading higher indicating strong up trend on short term basis.

* Long Buildup/Long Rollover has been seen February with rise in price, volume and open interest.

* USDINR February futures expected to trade higher with immediate resistance at 75.35 and support at 74.80.

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