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Rupee may gain in line with Asian peers - HDFC Securities 

* Indian rupee may gain in line with emerging Asian peers as Fed Chair Powell said supersized interest-rate hikes will be rare after a 75bps hike on Wednesday. Spot USDINR little changed at 78.0725 on Wednesday. Implied opening from forwards suggests the spot may start trading around 77.97. However, the set-up remains bullish as long as it trades above 77.50 while on the higher side it is facing stiff resistance around 78.30.

* A gauge of the dollar halted a five-day winning streak following the Federal Reserve’s decision to hike interest rates by 75 basis points, the most since 1994. An index of overnight dollar volatility is holding above 20% ahead of Wednesday’s Fed decision, the highest since the US elections in 2020.

* After a last-minute ECB meeting on Wednesday, the Governing Council said it had instructed committees to create a new instrument to tackle so-called fragmentation. They pledged to speed up work on a new tool to combat unwarranted jumps in euroarea bond yields.

* Asian stocks in line with US stocks were poised to extend their gain after the Federal Reserve indicated that outsized interest rate hikes are unlikely the norm in upcoming policy meetings.

* The US yield curve steepened sharply after Federal Reserve Chair Jerome Powell opened the door for another 75 bps at the July Fed meeting, suggesting the Fed is front-loading rate hikes.

* Powell might have convinced markets the Fed will manage to get inflation under control with a couple of outsized rate hikes in the coming months and buy itself some flexibility to slow down soon.

* Oil rose after falling almost 5% over the prior two sessions as investors weighed the outlook for supply and demand following a big interest-rate hike from the Federal Reserve and rising US crude output. West Texas Intermediate futures climbed toward $117 a barrel in Asian trading on Thursday.

USDINR Technical Observations:

* USDINR June futures is having resistance at the upper band of the Bollinger and ascending trend line at 78.40 and support at 77.82, the middle band of the Bollinger.

* Relative Strength Index of 14 days oscillating around overbought zone indicating positive momentum.

* MACD flatten on daily chart indicating consolidation in an up trend.

* While the overall trend for USDINR June futures is expected to remain bullish short-term profit booking can’t be ruled out.

* The pair is facing stiff resistance around 78.40, the level where bulls are getting exhausted. On the downside, it is having a support of around 77.80.

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