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Rupee Outlook and Strategy

* The US dollar index rallied more than 0.5% after US Jobless claims dropped to 190k, suggesting strong job market. Further, rise in the labor costs raised the prospects of tighter monetary policy by the Federal reserve. The hawkish comments from the Fed member to keep lifting rates to rein inflation also supported the dollar to move back towards the 105 mark. Moreover, 2 year bond yields rallied towards 4.94,highest since July 2007, as the probability of rate hike mounted

* The rupee future maturing on March 28 depreciated marginally to 82.72 amid weaker domestic markets and rise in dollar index

* The rupee is expected to depreciate for the day amid rise in dollar. Further, expectation of better US service PMI numbers could also support the dollar to strengthen again. US$INR is trading near the 50 day EMA support at 82.30. As long as it holds, the pair is likely to rebound towards 82.80. Only a move below the support of 82.30 would weaken the pair towards 82.10.

Euro and Pound Outlook

* The Euro slipped yesterday majorly on the back of strong dollar. However, further downside was cushioned as Euro zone CPI Flash estimates figures came hotter than expected, raising expectation for further rate hikes from ECB. Additionally, ECB president has reiterated her stance on 50 bps hike in the March meeting as inflation is still too high

* Euro is expected to trade in a sideways range today ahead of key service PMI numbers. EURUSD is facing the resistance of 20 day EMA at 1.065. On the downside 1.0565 would act as key support to the trend. The oscillator RSI is hovering below the neutral zone at 43, suggesting weakness in momentum. Hence, any move below 1.565 would open the downside in the pair towards next support at 1.053. EURINR (March) is expected to dip towards 87.20 as long as it trades under 88.20

* The Pound gave up its gains as dollar marched to its day high. Further lower scope of more rate hikes from BOE despite higher inflation number has weighed over the pair to trade lower

* The pound is expected to trade with in the range of 1.1910- 1.2050 for the day. The 20 day EMA at 1.2050 acts as key resistance. On the lower front, 1.1910 holds key to the trend. Meanwhile, the RSI has slipped below the 40 mark suggesting weakness in momentum. GBPUSD is likely to consolidate with in the range of 1.191-1.2050 ahead of key Service PMI number. GBPINR (March) is expected to dip towards lower band of the consolidation range 98.10-99.30

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