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Rupee Outlook and Strategy

• c Further, the dollar was supported after the University of Michigan consumer sentiment for the US increased to 63.9 in June 2023, the highest in four months from 59.2 in May, reflecting greater optimism as inflation eased and policymakers resolved the debt ceiling crisis

• The rupee future maturing on June 27 appreciated by 0.33% on Friday and touched levels last seen five weeks back amid sharp FII inflows in domestic equity markets

• The rupee is likely to depreciate today amid a recovery in the dollar and weak global market sentiments. Further, investors will remain cautious ahead of comments from US Fed officials to get cues on future rate trajectory. US$INR is expected to find support near 81.90 and trade in an upward trend towards the level of 82.10

Euro and Pound Outlook

• The Euro lost its earlier gains and closed with a marginal lass of 0.04% on Friday amid a decline in German 10 year’s bond yields and recovery in the dollar. Meanwhile, consumer price inflation in the Euro Area was confirmed at 6.1% in May 2023, the lowest since February 2022. Still, the rate remained significantly higher than the European Central Bank's target of 2.0%

• The Euro is likely to trade with a negative bias for the day amid a strong US dollar and drop in German treasury yields. Meanwhile, a sharp fall may be restricted on expectations that the ECB will continue to tighten its policy. EURUSD is likely to break the level of 1.0920 to continue its downward trend towards the level of 1.0900. EURINR is likely to trade in a downward trend towards the level of 89.55

• The pound continued to rise on Friday ahead of the Bank of England's monetary policy meeting next week. Further, the pound was supported on a rise in UK 10 year’s bond yields

• The pound is expected to trade with a positive bias amid rising expectations that the BoE will increase its interest rates by 25 bps this week. The pair is expected to take support near 1.2800 level and continue its upward trend towards the level of 1.2870. GBPINR is likely to trade in an upward trend towards the level of 105.00

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