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Rupee Outlook and Strategy

* The US dollar index inched higher on Tuesday to close with a marginal gain as strong US CPI numbers revived the likelihood that the Federal Reserve will hike interest rates. An easing of contagion concerns from the US banking turmoil also strengthened the dollar. Further, a rebound in the two-year bond yields has limited losses in the dollar

* The rupee future maturing on March 28 depreciated to 82.52 amid weakness in domestic equities

* The US$INR is likely to appreciate amid weakness in crude oil prices and rally in global equities. Further, expectation of a decline in US retail sales data and PPI numbers would also weigh on the dollar. US retail sales are expected to decline by 0.3% against the previous month’s rise of 3%. Further, the Empire state manufacturing index is also set to post weaker number. US$INR is likely to face key resistance at 82.64 and decline towards the immediate support at 82.10-82.00 zone

Euro and Pound Outlook

* The Euro continued to trade above the key psychological level of 1.07 as recovery in global equities helped it to trade on a firmer note. The pair settled near one month highs amid expectation that ECB will raise interest rates by 50 bps in its next policy

* The Euro is expected to hold its gains today amid expectation of better-than-expected economic numbers. The eurozone Industrial production numbers are set to gain by 0.3% against last month’s decline of 1.1%. Further, expectation of higher inflation numbers form Germany and France would also raise the prospects of tighter monetary policy form the ECB. 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, 1.065 (Mid Bollinger band) holds key support for the pair. The momentum indicator suggests bullish bias, as RSI is hovering above 55. Hence, any dip towards the supports would be considered as good buying opportunity in the pair. EURINR (March) is likely to rise towards 88.80 as long as it holds the key support at 87.70

* The pound pared some of its gains and settled near 1.215 as decline in pay growth numbers suggests softness in the UK inflation. Further, the recovery in the dollar index has also limited the upside in the pound to go beyond 1.22 mark

* The pound is expected to trade in the range of 1.21-1.2210. The softness in the pay growth numbers could change the aggressive stance of the BoE. Now, the pair is hovering near the key resistance zone of 1.2210. The pair has to cross above 1.2210 to resume its rally further towards 1.2260 else we may see a consolidation. GBPINR (March) is likely to face a hurdle near 100.60 with support for the pair holding around 99.60

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