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Rupee Outlook and Strategy

• The US dollar index fell more than 0.50% after US Federal Reserve hiked interest rate by 25 bps and signalled they may be done raising rates for now. Further, lack of clarity on US debt ceiling weighed on the dollar and weakened it towards 101 mark

• Rupee future maturing on May 29 appreciated by 0.08% on Wednesday amid weaker crude oil prices and softness in dollar

• The rupee is likely to hold its gains amid weakness in the dollar and softer crude oil prices. Further, anticipation of no hike in the next Fed policy would also support the rupee. The Fed Watch tool suggest 88% probability of no hike in in June meeting. US$INR is expected to hit the key supports of 81.50-81.60 as long as it trades under the 50 day EMA at 82.10

Euro and Pound Outlook

• The Euro gained more than 0.50% amid weakness in the dollar and better-thanexpected unemployment rate data. The eurozone March unemployment rate unexpectedly fell 0.1% to a record low of 6.5%, showing a stronger labour market than expectations of no change at 6.6%

• The Euro is expected to trade on a bullish note amid weakness in the dollar and on expectation of 25 bps interest rate hike by ECB. Further expectation of better service PMI numbers would also support the common currency. The pair is expected to trade above the 1.1050 mark as long as the bullish crossover of 5 and 20 day holds. A move above 1.11 would open the gates for next key level at 1.1135-1.1160. EURINR is expected to hold the support of 90.20 and move higher towards 91.00-91.20

• The pound made fresh highs against the dollar on Wednesday approaching towards 1.26 levels last seen in June 20222. The weakness in dollar following indications from Fed that this could be the end of the rate hike regime has supported the pound to rally

• The pound is expected to appreciate further on anticipation that BoE would raise the rates by 25 bps points in its upcoming policy. Investors also see a 50% chance of borrowing costs reaching 5% by August. The pair is hovering inside the mid and higher Bollinger band with RSI above 60, which would support the pair to go beyond 1.26 and hit next key resistance at 1.2660-1.27. GBPINR is expected to hit the psychological level of 103. A move above 103 would strengthen it further towards 103.60. On the downside 102.45 holds as key support

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