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Rupee Outlook and Strategy

* The US dollar traded flat on Monday but hovered near a six-week high as a recent flurry of positive economic data reinforced market expectations of tighter monetary policy from the Federal Reserve

* The rupee future maturing on February 24 appreciated by 0.14% despite a rise in crude oil prices and FII outflows from domestic equity markets

* The rupee is expected to depreciate for the day amid a strong dollar and pessimistic global market sentiments. Further, investors will closely watch a series of key macroeconomic data from the US, which is expected to show manufacturing and services sector improved last month. US$INR is likely to trade in an upward trend towards the level of 83.00 as long as it sustains above the level of 82.60 in the coming trading sessions

Euro and Pound Outlook

* The Euro fell 0.09% on Monday despite better-than-expected consumer confidence data from the euro area. The consumer confidence indicator in the Euro Area rose by 1.7 points to -19 in February 2023, the highest in a year and in line with market expectations

* We expect the Euro to trade with a positive bias for the day amid an uptick in German 10 years bond yields. Further, the single currency may rise as Manufacturing and Services PMI data from Europe is likely to show improvement in activity. Additionally, ZEW economic sentiments data is expected to show that investor’s sentiment remained in positive territory. EURUSD is likely to break the key resistance level of 1.0700 to continue its upward trend towards the level of 1.0750. EURINR (February) is expected to break the key resistance level of 9 DMA at 88.65 and continue to rise towards 88.80 level

* The pound depreciated after touching 1.2056 level yesterday amid a drop in UK 10 years bond yields. Further, the pound fell as the market is currently pricing in an almost 75% chance of a 25 bps rate hike from Bank of England at its March meeting

* The pound is expected to trade with a positive bias for the day amid expectations of improved economic data from Britain. GBPUSD is likely to break the key resistance level of 1.2040 to continue its upward trend towards the level of 1.2080. GBPINR (February) is likely to rise toward the level of 9 DMA at 99.90 for the day

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