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Rupee Outlook and Strategy

• The US dollar fell from one-month highs on Tuesday after US Federal Reserve Chair Jerome Powell said he expects significant declines in inflation this year. Further, the dollar slipped after data showed the trade deficit in the US widened to $67.4 billion in December 2022 from a downwardly revised $61 billion in November, which was the lowest since September 2020

• Rupee future maturing on February 24 traded flat despite a sharp rise in crude oil prices and continuous FII outflow from the domestic equity markets

• The rupee is expected to depreciate today amid persistent FII outflow and surge in crude oil prices. Meanwhile, investors will closely watch RBI’s monetary policy, where the central bank is expected to hike interest rate by 25 bps to 6.50%.The US$INR is likely to surpass the hurdle of 82.85 to continue trading towards the level of

Euro and Pound Outlook

• The Euro fell marginally on Tuesday amid weaker-than-expected macroeconomic data from the Euro area. Industrial production in Germany went down sharply by 3.1% MoM in December 2022, worse than market forecasts of a 0.7% decline. This marked the steepest decline in industrial output since March 2022

• We expect the Euro to trade with a positive bias for the day amid a weakness in dollar and optimistic global market sentiments. Further, rise in German government bond yields may support single currency. EURUSD is likely to break the key resistance level of 30 DMA at 1.0777 to start trading in upward trend toward the level of 1.0800. EURINR (February) is likely to rise towards 89.10 levels

• The pound appreciated on Tuesday after touching a fresh one-month low amid weakness in dollar and rise in UK 10 years bond yields. Further, the pound was supported by better-than-expected Halifax house price index data from Britain

• The pound is expected to trade with a positive bias for the day amid soft dollar and rise in risk appetite in the global markets. GBPUSD is likely to break the key resistance level of 1.2100 to continue its upward trend towards the level of 1.2150. GBPINR (February) is expected to rise towards the level of 99.60

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