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Rupee Outlook and Strategy

• The US dollar index recovered earlier losses and edged higher on Monday as investors remained cautious ahead of several key policy decisions due this week. Meanwhile, US government budget deficit came in at US$240 billion in May 2023, widening from a US$66 billion deficit in the corresponding period of the previous year and below market expectations of a US$236 billion gap

• The rupee maturing on June 27 appreciated marginally by 0.04% on Monday amid easing crude oil prices and positive domestic equity markets

• The rupee is likely to appreciate for the day amid a soft dollar and decline in crude oil prices. Further, US inflation is likely to ease to 4.1% in May and stay below 5% for a second consecutive month giving space to the Fed to keep interest rates unchanged. US$INR is expected to trade in a downward trend towards the level of 82.34

Euro and Pound Outlook

• The euro rose marginally on Monday amid a rise in risk appetite in global markets. However, sharp upside was restricted on a strong US dollar and drop in German 10 year’s bond yields

• The Euro is likely to move north towards 1.0800 levels amid a soft dollar. Meanwhile, expectations of disappointing economic data from the Euro Area may prevent single currency to go beyond 1.08 levels. EURUSD may find support near 1.0730 levels and rise further till 1.080 levels. A sustained break above 1.0800 level may open the doors for 1.0820/1.0850 levels. EURINR is likely to hold the support near 88.50 levels and rise towards the level of 89.00

• The pound dropped by 0.58% on Monday amid a firm US dollar. However, further downside was restricted on an uptick in UK 10 year’s bond yields

• The pound is expected to trade with a positive bias amid a weak dollar. Further, investors will keep a close eye on UK job data as it could be pivotal in setting expectations for what the central bank may do in its upcoming meeting. Average earnings index is expected to rise from 5.8% to 6.1% while the unemployment rate is forecast to increase to 4% from 3.9%. The pair is expected to take support near 20- Day EMA at 1.2470 level and move back to 1.2580 levels. GBPINR is likely to rise back till 103.55 levels as long as it holds the support near 102.85 levels

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