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Rupee Outlook and Strategy

• The US dollar index on Monday rose 0.10% on higher treasury yields. The 10-year treasury yields went past the 3.5 mark on growing optimism that the worst stress in the US regional banking system may be over

• Rupee future maturing on May 29 depreciated by 0.02% on Monday amid surge in crude oil prices

• The rupee is likely to trade on a stronger note amid robust inflows into domestic markets and weaker dollar. The dollar is expected to trade under pressure amid rising concerns over US debt ceiling after Janet Yellen warned of possible financial market consequence if the debt ceiling is not raised by early June. US$INR is facing a key hurdle near 82 (20 DMA). For the day, US$INR is expected to slide towards key supports of 81.74-81.70 as long as it trades under the 82.00 level

Euro and Pound Outlook

• The Euro gave up its early gains and fell towards 1.10 amid weaker-than-expected Eurozone May sentix investor confidence data and German industrial production numbers. German Industrial production declined 3.4% MoM against its forecast of 1.5% decline, the biggest decline in a year. ,Earlier the Euro moved higher on hawkish comments from ECB Governing council member Knot, as he pointed towards more rate hikes to rein the high inflation in the region

• The Euro is hovering above the bullish cross over of 20 and 50 day EMA, which could support its bullishness in the trend. The 20 day EMA at 1.0960 would act as key support for the pair. On the upside, immediate resistance exists around 1.1050. A move above would open the doors for next key level at 1.11-1.1135. EURINR is expected to hold the support of 89.80 and move higher towards 90.40-90.60

• The pound hit its one-year peak on Monday, but slipped towards the end of the session to settle near 1.2617. The pair is still hovering near its one–year high ahead of this weeks BoE policy, where the central bank is most likely to hike the key rates by 25 bps

• The pound is expected to remain in a tight range of 1.2590-1.2650. The key support for the pair is near 1.2550. The expectation of better Halifax HPI number could support the pair to hold above the immediate support at 1.2590. GBPINR is expected to hold above the breakout support at 102.90 and move back towards 103.50-103.60

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