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Rupee Outlook and Strategy

• The US dollar edged higher to a seven-week peak on Friday, as core PCE price index data showed inflation accelerated in January reinforcing expectations that interest rates could stay higher for longer. Further, dollar was supported on uptick in US 10 years treasury yields. Additionally, the University of Michigan consumer sentiment was revised higher to 67 in February 2023, the highest since January 2022, from a preliminary of 66.4

• The rupee future maturing on March 28 depreciated marginally amid FII outflow from the domestic equity markets

• The rupee is expected to depreciate for the day amid strong dollar, FII outflows and rising crude oil prices. Further, investors will closely watch core durable goods orders from US, which is expected to rise from -0.20% to 0.10%. US$INR is likely to rise towards the level of 83.10

Euro and Pound Outlook

• The Euro fell nearly 0.50% on Friday amid strong dollar and weaker than expected economic data from the euro area. The German economy shrank 0.4% in the last quarter of 2022, much worse than initial estimates of a 0.2% decline, marking the first drop in GDP in nearly two years

• We expect Euro to trade with a negative bias for the day amid strong dollar and pessimistic global markets sentiment. EURUSD is likely to break the key support level of 1.0510 to continue its downward trend towards the level of 1.0480. EURINR (February) is expected to drop towards the level of 87.50

• The Pound depreciated by 0.60% on Friday amid strong dollar and risk aversion in global markets. Meanwhile, further downside was prevented as the consumer confidence indicator in the United Kingdom improved to -38 in February 2023 from - 45 in the previous month and pointing to the highest reading since April 2022

• The pound is expected to trade with a negative bias for the day majorly on the back of strong dollar. GBPUSD is likely to break the key support level of 200 DMA at 1.1930 to continue its downward trend towards the level of 1.1870. GBPINR (February) is expected to drop towards the level of 99.10

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