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Rupee Outlook and Strategy

• The US dollar gained more than 0.50% on Thursday as strong economic number further pared back bets on easing by Federal reserve. In addition to that, optimism about a US debt ceiling deal to avert US default has further strengthened the dollar. Moreover, hawkish comments from Fed officials to keep rates higher for longer has supported the dollar to rise back towards its two-month high at 103.60

• Rupee future maturing on May 29 depreciated by 0.23% on Wednesday amid strong dollar

• The rupee is likely to continue its weakness amid firm dollar. Dollar is gaining strength as solid economic data from US and hawkish comments from Fed officials have trimmed the bets on easing by Fed. Additionally, investor will remain cautious ahead of Fed Chair Powel’s speech to get hints on the future rate trajectory. For the day, US$INR is expected to rise towards 82.80 as long as it holds above 82.55

Euro and Pound Outlook

• The Euro declined more than 0.50% on Thursday amid strong dollar. However, losses in the pair was limited on hawkish comments from ECB Vice President Guindos. He said that the inflation in service sector is most worrying for ECB, and it is too soon to say where the ECB will pause its interest rate hike

• The Euro is expected to extend its weakness and move towards 1.0720 on firm dollar. Immediate resistance to the pair exists near 1.0840. However, sharp fall may be cushioned as comments from ECB officials indicate that central bank is not done with tightening. EURINR is expected to face the resistance near 89.50 and slide towards immediate support of 89.00

• The pound failed to hold its gains and weakened towards 1.24 mark amid sharp rally in the dollar. The pound slid more than 0.50% against the dollar to its lowest level in the month of May

• The pound is expected to trade under pressure and move towards 1.2370 amid strong dollar. Further, pound may slip on worries over stagflation. The pound is trading near the 50 day EMA at 1.2405, a move below this level would weaken the pair towards 1.2370. Immediate resistance for the pair exists neat 1.2450. GBPINR is expected to face the resistance near 103.00 and slid towards 102.40

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