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Rupee Outlook and Strategy

• The US dollar index fell to its lowest level in a month to 102.53 after the Fed raised rates by 25 bps in line with market expectations. Further, US treasury yields across the curve declined as the Fed signalled it may soon pause future interest rate hikes amid recent turmoil in financial markets. Further, the FOMC cut its 2023 GDP forecast to 0.4% from 0.5%

• Rupee future maturing on March 28 closed at 82.68 on Tuesday

• The US$INR is likely to decline towards the key support of 82.40 amid weakness in the dollar. US dollar is expected to remain under pressure as scope of higher interest rate faded after the FOMC meeting. US$INR is facing key resistance near the higher band of the consolidation range 82.40-82.90. It is expected to breach the lower band of the consolidation and decline towards the next key support at 82.10

Euro and Pound Outlook

• The Euro recorded a significant gain on Wednesday as the dollar slid to its one month lows. Further hawkish comments from ECB President Lagarde to rein in higher inflation has also strengthened the pair. The ECB President in her speech said there is no clear evidence of inflation coming down and ECB will adopt a robust approach to tame inflation

• The Euro is expected to rise again above the 1.09 mark amid weakness in the dollar. Further, breakout from the higher band of the consolidation pattern would strengthen the pair to rally towards 1.094 and 1.097. The breakout of the triple bottom would support the bull case. EURINR (March) is likely to hold the support of five day EMA at 89.10 and rise towards 90.20-90.50

• The pound hit its February high on Wednesday amid weakness in dollar. Further higher inflation numbers, which still remained above the 10% mark have fuelled the speculation that the BoE would keep its interest rates higher for longer. The retail price index jumped to 13.8% against previous reading of 13.4%

• The pound is likely to trade on a bullish note ahead of today’s key BoE policy. The probability of 25 bps hike has increased after yesterdays higher inflation numbers. The bullish crossover of 20 and 50 day EMA is going to support the bull case. Additionally the rise in the RSI above the 60 mark would also push the pair to go past 1.23 towards 1.2350. GBPINR (March) is expected move towards 101.85-102, as long as the pair trades above 100.80

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