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Rupee Falls as Crude Rebounds

* The Indian Rupee could start on a steady note with the forward market hinting at an opening of 79.96. On Monday, the local unit underperforms among Asian currencies amid higher crude oil prices and strong dollar demand from importers.

* The overnight gains in crude oil price and dollar index could weigh on the rupee while foreign fund inflows and positive momentum in domestic equities could supportthe local unit.

* On Monday, spot USDINR gained 10 paise to 79.98, another record low on the closing basis. The technicalsetup still remains bullish for the pair and a crossing of 80 will open for the 80.90 level while on the downside it has support at 79.70 and 79.40.

* Asian shares were subdued after Apple's hiring plans highlighted concerns that aggressive monetary tightening portends an economic downturn. Japan pipped higher, while South Korea and Australia dipped. US futures rose after the S&P 500 erased a 1% gain.

* A dollar gauge remains near a record high, while Treasuries rose. Euro retraced back to 1.013 after climbing as much as 1.2% to 1.0201. The pound also saw weakness after rising as much as 1.43%, its highest in a week. Crude dipped but held above $100 a barrel and will likely stay there for the rest of the year, according to Iraq’s energy minister.

* US homebuilder sentiment fell in July to the lowest since May 2020 thanks to inflation and higher interest rates. The National Association of Home Buyers/Wells Fargo gauge decreased to a worse-than-expected 55, the largest monthly decline since the start of the pandemic.

Technical Observations:

* USDINR July futures formed Bullish Candlestick pattern negated the reversal of “Gravestone Doji Candlestick” .

* The pair has been trading well above the short-term moving averages and short-term moving averages are placed above the medium-term moving averages.

* It has been in bullish sequence of a higher tops and higher bottoms on all time frames.

* Relative Strength Index of 14 days hovering in overbought zone indicating positive momentum.

* Derivative data indicating unwinding July futures and addition in aggregate long positions. USDINR July futures is likely to trade in the range of 80.20 to 79.70.

USDINR July Daily Chart

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