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Rupee Outlook and Strategy

*The US dollar index gained sharply back to 104.60 as renewed concerns about the health of the European banking system sparked safe haven buying in dollar. The largest investor of the Credit Suisse denied any further financial assistance leading to sharp sell of in the banking stock and in global equities. Further, decline in US PPI and retail sales data also diminished the probability of tighter monetary policy form the Fed

* The rupee future maturing on March 28 depreciated to 82.86 amid weakness in domestic equities and rally in dollar index

* The US$INR is likely to move higher towards the key psychological level at 83 amid renewed turmoil in banking stocks and shifting interest rate expectation in US. US$INR is likely to find support at 82.60 and move towards 83.00. Only a close above 83.00 would open the upside in the pair towards 83.30

Euro and Pound Outlook

* The Euro lost the most on Wednesday amid worries over fresh crisis in the banking sector. Further decline in 10 year German bund yields to a 5-week low diminished the hopes of more monetary tightening form the ECB. The pair settled below the key psychological mark of 1.06 after rallying towards one month highs near 1.076

* The Euro is expected to trade on a weaker bias amid speculation that the ECB may raise the interest rate by only 25 bps instead of 50 bps. Further, the turmoil in the banking system and safe heaven buying in dollar would also restrict the euro go beyond 1.064. Now the pair is hovering in between the mid and lower Bollinger band channel support at 1.051, suggesting weakness in the trend. Hence as long as 1.064(Mid Bollinger band) resists, it is expected to move towards the 1.051. EURINR (March) is likely to slip towards 87.20 as long as it trades under 88.40

* The pound lost its ground against the dollar and slide by almost 0.7% on Wednesday as safe haven buying in dollar pushed the pair towards 1.20.

* The pound is expected to trade in the range of 1.20-1.2140 with a weaker bias as market participants expects BOE to pause its rate hikes in its March meeting. Investors see around a 40% chance of a 25 basis point hike and around a 60% chance they keep rates unchanged. GBPINR (March) is likely to face a hurdle near 100.60 and move lower towards the immediate support at 99.50

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