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Rupee Outlook and Strategy

• The US dollar dropped almost 0.40% on Wednesday amid rising worries over an economic slowdown in the US. Meanwhile, further downside was restricted as new orders for US manufactured durable goods improved from a month earlier in March 2023, recovering from a revised 1.2% decline in February and easily beating market expectations of 0.7% growth

• Rupee future maturing on May 29 appreciated by 0.23% to a sevenweek high on Wednesday amid a weak US dollar

• The rupee is likely to trade with a positive bias amid weakness in the US dollar and uptick in domestic equity markets. Also, the dollar may slide further on expectations of weak initial jobless claims and GDP data from the US. US$INR is expected to break the level of 81.80 to continue its downward trend towards the level of 81.65

Euro and Pound Outlook

• The Euro rose 0.60% yesterday amid a soft US dollar. Further, the Euro was supported as Germany's GfK consumer climate indicator increased for a seventh straight month to -25.7 heading into May 2023, the highest since April 2022 and compared with market forecasts of -27.9. Income expectations were the main contributor to the rise, improving for a seventh time and returning to pre-Ukraine war levels for the first time, helped by easing energy prices and anticipated wage raise

• The Euro is expected to trade on a bullish note amid weakness in US dollar. EURUSD is likely to break the level of 1.1070 to continue its upward trend towards the level of 1.1100. EURINR is expected to surpass the hurdle of 90.50 to trade in upward trend towards the level of 90.80

• The pound appreciated by 0.50% on Wednesday as traders pared back their holdings of safe-haven US dollar. Further, the pound was supported as labour productivity in the US, grew 0.4% quarter on quarter in the three months to December 2022, above preliminary estimates of 0.3%

• The pound is expected to trade with a positive bias amid a soft US dollar. GBPUSD is likely to continue its upward trade towards the level of 1.2525, as long as it sustains above the level of 20 DMA at 1.2440. GBPINR is expected to continue its upward trend towards the key resistance level of 102.50

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