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Rupee to Consolidate on Hope of Fund Flows and Lower Crude - HDFC Securities 

Rupee marked worst quarter in two years following risk-off sentiments, higher commodity prices, foreign fund outflows and weaker economic data. In March, spot USDINR gained by 45 paise or 0.60% to 75.79. Short term trend has turned weak while the overall up trend remains up as long as it trades above 74. The pair is expected to trade in the range of 74.50 to 76.50 with first fortnight could be on downside while second half of the month likely towards slow and steady recovery.

Bloomberg U.S. Aggregate Bond Index recorded its worst quarter since late 1980. Portions of the US Treasury yield curve inverted over the week as Central banks are rushing to end quantitative easing just at the time the bond market needs to price in the fact that inflation is non-transitionary. While the Fed says that the 2s10s yield curve merely represents rate expectations and doesn’t cause recessions.

Crude oil prices retraced from multi year high as several U.S. allies agreed to join the U.S. in releasing more oil from their reserves as part of a joint effort to lower prices and reduce reliance on Russian supplies.

As per CFTC data in Forex, yen, euro and sterling selling was the major flow. On aggregate, the dollar long increased by roughly $3 billion on the week.

The month will be relatively calmer than March as focus will remain on RBI Monetary Policy, Russia-Ukraine news, Federal Reserves and crude oil prices for directional trends.

USDINR

Technical Observations:

USDINR April futures has been trading in the ascending channel with higher side resistance around 77.50 and support around 74.30.

The pair has 13 and 21 weeks exponential moving average support at 75.60 and 75.35 respectively.

Momentum oscillator, Relative Strength Index (RSI) 14 weeks given negative cross over but remains above 50 indicating consolidation in up trend.

MACD has been heading upward with bullish histogram indicating continuation of up trend.

The pair is holding higher top higher bottom on weekly chart indicating continuation of up trend.

USDINR April futures expected to trade in the range of 74.50 to 77.

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