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Rupee Outlook and Strategy

• The US dollar index bounced back from its week’s low after sliding towards the key 102 level. However, a decline in US consumer spending growth index weighed on dollar to stay under 102.60 mark. The US 10 and two year treasury yields declined the most on Friday after key PCE numbers fell to 4.6% against the January reading of 4.7%

• Rupee future maturing on April 26 appreciated by 0.14% to 82.32 amid strong recovery in domestic equities

• The rupee is likely to trade with a positive bias amid improved global risk sentiments. Further, hopes of a less aggressive stance from the Fed towards higher interest rate would also check the upside in the dollar. The pair US$INR, has been hovering below the key 20 day EMA at 82.35, suggesting a weaker bias. Hence, as long as it trades under 82.35 it is likely to move towards the initial support at 82.05. A move below 82.05 would lead to a further slide towards 81.84

Euro and Pound Outlook

• The Euro declined by 0.57% on Friday as eurozone CPI numbers declined to 6.9% YoY against the forecast 7.1% YoY. In addition to that, weaker German unemployment numbers and retail sales growth also weighed on the Euro to move towards 1.084

• The Euro is expected to trade on a bullish note amid improved risk sentiments. However, expectation of weaker manufacturing PMI numbers in the eurozone could restrict it to go beyond 1.0930. The pair is still hovering above bullish crossover of 10 and 20 day EMA, which could support the bullish bias in the trend. Hence, the pair is expected to move in the range of 1.0808 (10 Day EMA) and 1.0930 with bullish bias. EURINR (April) is likely to hold the support of 10 day SMA near 88.80 and move towards the target resistance at 89.75

• The pound failed to capitalise on its earlier gains on Friday as a decline in house price index forced the pair to move towards 1.2330. Further, a rebound in the dollar also led to a correction in the pair

• The pound is expected to trade on a bullish note amid improved global risk sentiments. Meanwhile, expectation of a decline in manufacturing numbers could lead to a halt in the pair to go beyond 1.242. Key support for the pair exists near 1.2280. As long as it trades above 1.2280 it is likely to rise towards 1.2390-1.2400. GBPINR (April) is expected to move towards 101.90-102.00. On the downside, 101-100.80 would act as key support to the pair

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