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Rupee to turn down on weaker economic data

* Rupee stayed on right for a fourth week in row following foreign fund inflows, weaker dollar index and risk-on sentiments. On start of the week, spot USDINR remained in range with negative bias but at fag end of the week it gained recovered and lost ground. Weak set of economic data and surging virus cases could turn the table for the pair. However, one should focus on crude oil, riskassets and inflows for the short term trading bet.

* In the week gone, USDINR declined 15 paise to 74.15 from previous week 74.31. We expect retracement in coming days after whopping 3% decline in last one month. Technical pullback will remain on card with higher side resistance at 74.40 and 74.70 while falling below 73.80 will negate the said view.

* Euro has pared about half of past week’s gain amid bouts of profit-taking ahead of a US long weekend and a potentially poor start to equity trading next week. With the Fed looking to go aggressive on rate hikes this year, investors in Japan may reevaluate their hedge ratios, with a possible knock-on impact on spot USDJPY. Dollar index, the basket of six currencies, fell one sixth percentage points to 95.165 in the week gone as speculator cut some position ahead of holiday truncated week. WTI crude ripped past $84 a barrel to test the multi-year highs logged in October.

* On global FX front, the major flow was selling of yen, with the short increasing by 25.3k. Specs were sellers of dollars against most other currencies, however, as the week saw net buying of euros (7.6k), sterling (10k), Swissie (1.9k) and CAD (3.6k). Traders sold 2.1k Aussie, which with the yen flow helped increase the aggregate dollar long by about $400 million on the week.

USDINR

Technical Observations:

* USDINR January futures closed above Doji candlestick pattern high which could trigger short term reversal.

* The pair is still in bearish formation of lower top lower bottom daily and weekly chart.

* The pair is having resistance in the range of 74.65 to 74.85 while resistance has been shifted to 74 to 73.80.

* Momentum oscillators are showing sign of reversal as they try trying to exit from oversold zone.

* Looking at the Friday’s candle and volume there are chances extending gains.

* USDINR January futures expected to show short covering rally in coming days with resisting around 74.70 and support at 73.90.

USDINR January Daily Chart

EURINR

Technical Observations:

* EURINR January futures resisted at 55 days exponential moving average and formed Doji candlestick patterns indicating short term reversal.

* The pair is still in bearish sequence of lower top lower bottom.

* It is having falling trend line resistance at 85.75, adjoining low of 87.75 to 86.55.

* Momentum indicator, MACD turned upward and given positive cross over and about to cross zero line suggesting bullish ness.

* DMI turned bullish as +DI placed above – DI and ADX line flatten considered bullish.

* EURINR January futures, near term trend remains bearish until it crosses 85.75 level while on downside 83.95 remains strong support.

EURINR January Daily Chart

GBPINR

Technical Observations:

* GBPINR January futures started forming higher top higher bottom on daily chart, first sign of short term trend reversal.

* Short term moving averages expected to cross medium term moving averages upward indicating short term up trend.

* MACD crossed MACD average which placed above zero line indicating upward trend.

* Looking at the DMI, the +Di crossing – DI and ADX line about to cross –DI upward indicating sharp upward momentum.

* GBPINR January futures expected to trade higher and level above 102.10 will lead to further upward movements to 103 while on downside 101.15 becomes support.

GBPINR January Daily Chart

JPYINR

Technical Observations:

* JPYINR January futures has resistance at 65.63, the 50% retracement level adjoining high 67.27 and low 64.10.

* The pair closed above short term moving average of 21 Days exponential moving average.

* Momentum indicator, MACD crossed MACD average given upward cross over indicating short term upward trend.

* +DI crossed –DI upward and ADX line stayed above 25 line indicating short term reversal in trend.

* In last three days we have seen surge in volume and price indicating short covering.

* JPYINR January futures is having resistance at 65.70 and support at 64.50.

JPYINR January Daily Chart

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