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Rupee Outlook and Strategy

• The US dollar index gained by 0.27% on Tuesday as traders saw no immediate breakthroughs on US debt ceiling talks. Further hawkish comments form the Fed members has also supported the dollar. New York Fed President Williams said he believed interest rates should not be cut this year

• Rupee future maturing on May 29 depreciated by 0.33% on Monday on the back of firm dollar

• US$INR is likely to face the hurdle near 82.25 and decline towards the 81.90 amid expectation of decline in US core CPI numbers. The US core CPI number is expected to dip towards 5.5% against previous reading of 5.6%. US$INR could face the resistance of higher Bollinger band channel resistance near 82.25 and move back towards the immediate support at 81.90. Only a sustained move above 82.25 would push the pair towards 82.40

Euro and Pound Outlook

• The Euro fell more than 0.30% on Tuesday amid stronger dollar. It slide below the 1.10 mark despite the hawkish comments form ECB Governing Council members Kazimir and Kazaks, who said the ECB needs to keep raising interest rates

• The Euro is expected to take a pause in its decline and move back towards 1.1020 mark amid soft dollar. However, anticipation of softness in German inflation numbers could limit the pair to go beyond 1.1020. Key support for the pair holds near 1.093( 50 day EMA). EURINR is expected to hold the support of 20 day EMA at 89.80 and rebound towards 90.40. Only close below 89.80 would weaken the pair towards 89.60

• The pound held its ground above the 1.26 mark amid better than expected BRC retail sales numbers. But decline in the Halifax HPI data has limited its upside. Meanwhile, expectation of further rate hike in the upcoming policy has raised the bullish outlook in the pair

• The pound is expected to remain in a tight range of 1.2575-1.2650 ahead of tomorrows key BOE policy. The higher inflation numbers in UK has raised the bets for year end rates to test 4.8%, which would support the pair to stick to gains against the dollar. 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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