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Rupee Gyrating Around Psychological Level Of 75

• The Indian rupee is expected to open slightly lower following a stronger greenback against all major currencies amid risk-off sentiments and foreign fund outflows. The forward markets indicate spot USDINR could open 6-7 paise higher and may add gains as the day progresses. On Monday, spot USDINR settled at 79.44 with gains of 19 paise. The trend remains bullish with an eye on 80 while on the downside 78.80 is a crucial support.

• The Reserve Bank of India (RBI) on Monday announced an arrangement for domestic traders to settle imports and exports in rupees which could reduce the pressure on Forex reserves. However, the impact of the announcement will be in the longer run, the short-term trend of the rupee will be based on capital flows which are currently not in favour.

• Asian stocks and US equity futures fell early today as the dollar and sovereign bonds rose, highlighting persistent unease about the economic outlook amid high inflation and China’s struggles with Covid.

• Risk-averse supported a rally in the US dollar against its Group-of-10 peers on Monday, sending a key gauge of the greenback to its highest since Covid was shuttering cities in March 2020. A stronger-than-expected US jobs report last week spurred expectations for bigger interest-rate hikes by the Federal Reserve, boosting demand for havens. US Treasuries extended gains, taking the US 10-year yield to 2.96%.

• Europe’s common currency edged closer toward parity with the dollar as energy concerns and the risk of recession weighed on the outlook for the euro area. The euro dropped to $1.0028, the last time it was this low was back in 2002. The pound fell to 1.1882 against the dollar on political worries.

• The yen was little changed near a 24-year low against the dollar, with investors seeing more downside amid the prospects for a further widening in yield differentials. JGBs are expected to track Treasuries higher.

Technical Observations:

• USDINR July futures closed at an alltime high after briefly consolidating in the last eight days.

• The pair has been trading with higher highs and higher lows indicating a bullish trend.

• It has been holding support of 13 days support at 79.05 while on the upside 79.90 acts as resistance.

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

• +DI is placed well above –DI and ADX line strengthening indicating a bullish trend.

• USDINR July futures is likely to trade higher with eyes on 79.90 in the coming days. The bias remains bullish as long as it holds above 78.80.

USDINR July Daily Chart

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