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Rupee sets for Difficult open After US Equity Routs  - HDFC Securities 

• Asia stocks will face a challenging open after U.S. shares got creamed. The S&P 500 fell 2.8%, and the Nasdaq Composite tumbled 4%. On other hand, dollar traded stronger across the board following haven demand. The dollar index stood at its highest level since March 2020 on Wednesday and heading for its best month since 2015. China’s Covid struggles and the prospect of aggressive Federal Reserve monetary tightening all pointed to a deteriorating economic outlook and stronger greenback.

• USDINR expected to open right amid weaker regional currencies and equities, stronger dollar index and crude oil. The forward USDINR indicating 22 paise higher opening at domestic bourses.

• On Tuesday, spot USDINR snaps two days gain by falling 12 paise or 0.15%. Recovery in domestic equities and expectations of foreign fund inflows through LIC IPOs weigh on pair. However, the sentiments remain bullish for USDINR following speculative foreign fund outflows from equities and debt along with weaker economic activities. The pair is having resistance at 76.97 and support at 76.15.

• Pound dropped 2% against US dollar after soft retail sales data has prompted a rethink of Britain's rates outlook, hit a fresh 21-month low of $1.2560 on Wednesday.

• Energy packs gained after announcement Russia will cut off the gas supply to Poland and Bulgaria, escalating the standoff between Moscow and Europe over energy supplies and the war in Ukraine.

• The Bank of Japan meets on Wednesday and Thursday and markets see some risk of adjustment to forecasts or even policy changes to try and arrest the yen's recent tumble.

Technical Observations:

• USDINR May futures holding the support of short term moving averages and short term averages are placed above medium term moving averages.

• The pair closed below Doji Candlestick pattern’s low indicating near term weakness in the pair.

• Relative Strength Index of 14 days period placed at 55.24 slightly weaken from previous day but remained above 50 suggesting consolidation.

• +DI is placed above –DI and ADX line strengthening indicating firmness of trend.

• USDINR May futures could head towards psychological level of 77 while find support 76.50. As long as pair holds 76.50, the bias remains positive and sustainable trade above 77.30 will open for 78.

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