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Rupee Outlook and Strategy

* The US dollar index declined almost 1% on Monday as the ongoing turmoil in the US banking sector diminished expectations of a tighter Fed policy. Markets are pricing in the Fed cutting rates this year, with the fed funds rate expected to fall to 3.80% in December, from 4.57% now. The two-year treasury yield plunged 57.2 basis points to 4.016% in the biggest one day fall since 1987

* The rupee future maturing on March 28 depreciated to 82.23 amid weakness in domestic equities

* The US$INR is expected to face resistance near the higher end of the trading range at 82.45-82.50 amid weakness in the dollar. The CME Fed watch toll suggests a 27% probability of a zero basis point hike in the federal funds target in its next meeting. Further, expectation of a decline in US inflation numbers would also limit rate hike hopes. US$INR is likely to face key resistance at 82.50 and decline towards the immediate support at 82.00

Euro and Pound Outlook

* The Euro resumed its rally on Monday amid a sell-off in the dollar. The pair rose by 0.86% on Monday to 1.073 amid expectation that ECB will raise interest rates by 50 bps in its next policy.

* The Euro is expected to trade with a positive bias amid weakness in dollar. The pair rallied above the key psychological mark at 1.07 and confirmed the trend reversal double bottom pattern, suggesting further upside. Now the pair is hovering near the higher band of the Bollinger band channel resistance at 1.075, which could act as immediate hurdle for the pair. On the downside, 1.0633 (Mid Bollinger band) holds key support for the pair. Hence, as long as 1.0633 holds, the pair is expected to rise towards the 1.075 to 1.078 zone. EURINR (March) is likely to rise towards 88.80 as long as it holds the key support at 87.70

* The pound marked a significant gain on Monday by almost 1.25% amid weakness in the dollar. Further, the BoE on Monday said that its banking system was sound after the central bank helped to get buyers for the British arm of SVB

* The pound is expected to trade in the range of 1.2045-1.2210 ahead of today’s key job numbers. The pair is hovering above the 20 day EMA at 1.2045 and is expected to face a hurdle near the higher band of the Bollinger band channel resistance at 1.221 level. GBPINR (March) is likely to face a hurdle near 100.60 with support for the pair holding around 99.60

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