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Rupee to end three day rout following higher equities - HDFC Securities 

Indian rupee expected to rebound after falling for three consecutive days in row. Overnight weakness in dollar index and stronger yuan fixing could support the Asian currencies in today’s trade. Today is the expiry of March derivative contracts which could be around 72.50.

On Thursday, spot USDINR gained 6 paise to 72.63, marking decline for third day following weakness in equities and increase in virus cases fuel caution ahead of Financial Year end. Technically, USDINR remains above year to date (YTD)low with double-bottom still developing. It has Resistance at 73.3421, 100-DMA and 73.7738, YTD high while expected to get support at 72.2688, YTD low and 72.0792, lower Bollinger band. We expect USDINR to trade in the range of 72.26 to 72.80 in coming days.

Asian currencies and stocks look set to climb following U.S. gains and weaker dollar index. Dollar index has been placed above key 200-day moving average resistance level at 92.63 and euro sank to the lowest since November amid vaccine rollout concerns. U.S. job data Thursday showed a bigger-than-forecast drop in weekly jobless claims supported the riskier assets to recover some early losses

The weekly jobless claims bring on a bullish reversal in stocks, as the S&P 500 erased an early 1% decline to finish higher by 50 basis points, while Treasury’s gave back early gains to leave the 10- year yield at 1.63%.

At his first news conference since becoming U.S. president, Joe Biden promised to outspend China on innovation and infrastructure to help the U.S. retain its place as the world’s most powerful country. He also said he's open to diplomacy with North Korea but warned that recent missile tests could prompt a response if Pyongyang continues.

Federal Reserve Bank of Chicago President Charles Evans is upbeat about the outlook for lower unemployment, but worries it may be challenging to decisively lift inflation to the central bank’s 2% goal.

Technical Observations:

USDINR April futures formed bearish candlestick pattern, erasing previous day’s gain. It has been trading well below short term and medium term moving averages.

Momentum oscillators, Relative Strength Index again turned down and placed below 50.

USDINR April futures expected to trade with negative bias following bearish chart formation of lower top and bottom on major time scale. Derivative data also supporting bearishness as we have seen rise in open interest and fall in price.

The paise has near term support at 72.80 and resistance at 73.42.

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