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Rupee Outlook and Strategy

* The US dollar index hit a fresh two month high on Friday as betterthan-expected US economic numbers raised the prospects of higher interest rates. The US core PCE price index improved to 0.4% against forecast of 0.3% in last month. Further, improvement in US personal spending and durable good order data raised bullish bets on the dollar

* Rupee future maturing on May 29 appreciated by 0.17% on Friday amid strong FII inflows

* The rupee is likely to appreciate amid a rise in risk appetite in global markets. Market sentiments improved after President Biden and House speaker Kevin McCarthy reached a tentative agreement to raise the nation’s borrowing limit for two years. However, sharp gains may be limited as the sticky inflation data from US raise the bets that Fed may keep its rates elevated for longer period. The US$INR pair is likely to consolidate at 82.40-82.80. Only a close above 82.80 would lead to a rise towards 82.90

Euro and Pound Outlook

* The Euro remained under pressure and hit the lowest level in last two months amid strong dollar and weaker economic numbers from the eurozone. Meanwhile, hawkish comments from ECB members to raise rates amid higher inflation numbers limited its downside

* The Euro is likely to move towards the immediate support near 1.070 as long as it trades under the 10 day EMA at 1.0770. EURINR is likely to extend its weakness towards 88.50, as long as it trades under 89.00 • The pound paused in its decline and reversed its earlier losses amid improvement in key retails sales numbers. UK retails sales improved 0.5% last month against the previous reading of -1.2%

* The pound is expected to remain in the range of 1.2310-12390. Low liquidity could be observed today due to bank holiday in the UK. GBPUSD is likely to face resistance of 10 day EMA at 1.2390 and on the lower end 1.2310 would act as key support to the pair. GBPINR could slip towards 101.80 as long as it trades under 102.50

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