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Rupee Outlook and Strategy

• The US dollar index fell by 0.20% on Wednesday as the US CPI dropped below the expected 5% mark for the first time since June 2021. The drop in the April CPI to 4.9% knocked the Treasury yields lower and raised the bets that Fed would cut the rates in this year.

• Rupee future maturing on May 29 appreciated by 0.03% on Tuesday on the back of weak dollar

• US$INR is likely to face the hurdle near 82.15 and decline towards the 81.80 as the probability of rate cut towards the second half of the year has increased. US$INR could face the resistance of 50 day EMA at 82.15 and slide towards the immediate support at 81.80. A move below 81.80 would weaken further towards 81.60

Euro and Pound Outlook

•The Euro bounced back form its day’s lows and closed with a gain of 0.15% on Wednesday amid weakness in dollar. Further hawkish comments form the ECB president Lagarde boosted the Euro. She said the inflation outlook could face "significant upside risks," and the ECB still has "more ground to cover."

• The Euro is expected to move back towards 1.10 mark amid weakness in dollar. The pair held the key support near the 50 day EMA at 1.0940 and moved above the 20 day EMA suggesting bullishness in the trend. A move above 1.10 would open the doors towards the neat resistance at 1.1020-1.1040 levels. Further the strength in the oscillator RSI would also support the pair to hold its gains. EURINR is expected to hold the support of 20 day EMA at 89.80 and rebound towards 90.40. Only a close below 89.80 would weaken the pair towards 89.60

• The pound remained above the 1.26 mark as the dollar weakness helped it to stay near its one-year high. Further, expectation of rate hike in upcoming policy has raised the bullish outlook in the pair

• The pound is expected to trade with the positive bias ahead of today’s key BoE policy. The anticipation of rates to hit the 4.8% mark by September would support the pair to stick to gains against the dollar. The pound could rise towards 1.2680 as long as it trades above the 1.26 mark. GBPINR is expected to trade with the bullish bias as long as it holds above 103. Above 103.70, it would rally towards 103.90-104.10

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