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Safe Haven Currencies Decline On Ease Of Geopolitical Worries - HDFC Securities 

• Indian rupee expected to add gains following weaker dollar index, lower crude oil price and surge in global risk assets after Russia said it will reduce military activities near Kyiv. In line with regional currencies, rupee expected to open higher at domestic bourses. The forward markets indicating spot USDINR could open 30 paise higher.

• On Tuesday, spot USDINR fell by 18 paise to closed below psychological level of 76. Technical setup has turned bearish with close below 76 and one can expect 75.70 and 75.5o in coming days.

• RBI on Tuesday announced that it has decided to undertake a sell/buy swap auction of $5 billion on April 26, 2022, to extend the maturity profile of the forward book and smoothen the receivables relating to forward assets.

• Stocks in Asia outside of Japan rose Wednesday as investors weighed prospects for a de-escalation in the war in Ukraine that sent Treasury yields lower.

• Russia said it will sharply reduce military activity near Ukraine’s capital Kyiv and its chief negotiator said Moscow would take steps to “de-escalate” the conflict. The talks failed to reach agreement on a cease-fire, however, and the Pentagon said Kyiv remains under threat.

• The dollar briefly dipped its lowest level in nearly four weeks as shares advanced amid optimism about progress in talks between Russia and Ukraine. EURUSD is up 0.6% at 1.1084, pair rose as much as 1.4% to 1.1137, matching the March 17 high, amid short-covering as bund yields advanced and cross-related buying. USDJPY slips 1%% to 122.93 amid slightly lower oil prices and falling Treasury 10- year yields.

• US Treasury 10-year yields fell 6bp to 2.40%, with the spread to 2-year at a three year low and briefly inverting; 5-year Treasury break-evens slid 11bp to 3.53%.

USDINR

Technical Observations:

• USDINR April futures closed below 21 days exponential moving average and break the support of 55 DEMA on intraday basis indicating weakness in the trend.

• Bearish sequence of lower top lower bottom is now in placed another indication of bearish trend.

• Relative Strength Index of 14 days period broken the center line support and currently placed at 47 suggesting weaker momentum.

• As per option data, max pain is seen at 76 strike while call writing witnessed at 76.50 strike while hedgers might have bought 75.50 Put.

• USDINR April futures turns bearish and falling below 76.25 will open 75.70 in coming days while 76.50 becomes near term resistance.

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