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Rupee Outlook and Strategy

• The US dollar index rose to the highest level in a month as traders shifted towards safe havens after US consumer sentiments data fuelled concerns about the US debt ceiling and monetary policy. The rising political dispute to raise the Federal Government’s borrowing cap has triggered the recession fear and supported the dollar to move above the 102.50 mark

• Rupee future maturing on May 29 depreciated by 0.09% on Friday on the back of strong dollar

• The rupee is likely to depreciate further towards 82.30 amid firm dollar and rising concerns over health of the global economy. The US$INR has moved out of the immediate consolidation range 81.60- 82.00. Now the next hurdle for the pair exists near 82.30. It has to move above 82.30 to extend its gain towards next key resistance at 82.50. On the downside 82.05 would act as immediate support

Euro and Pound Outlook

• The Euro pared all its earlier gains and fell more than 0.50% on Friday amid a strong dollar. The pair also suffered losses on concerns that higher interest rates would lead to a deterioration in the health of the economy

• The Euro is expected to remain under pressure amid a strong dollar. Further expectation of a drop in eurozone industrial production to -2.5% would also weigh on the pair. The pair has broken the key support of 50 day EMA at 1.089 and is expected to move further towards the next key support at 1.0804. The weakness in the oscillator RSI (41.50) would also weigh on the pair. For the day, the Euro is expected to slide towards 1.0804 as long as it trades under 1.089. EURINR could face resistance near 89.60 and weaken towards 89.00

• The pound traded in a weaker note on Friday amid strong dollar. Further, a drop in MoM GDP numbers by 0.3% has also weighed on the currency. The higher inflation numbers and sluggish growth in the region has halted the bullish momentum in the pair and weakened it towards 1.2450

• The pound is expected to slide further on the back of a strong dollar. Further, mounting fears on a slowdown in the global economy could also weigh on the pair. The pound could slide towards 1.2400 (50 DEMA) as it has been trading under the 20 day EMA at 1.2510. Further negative divergence in the RSI could also bring correction in the trend. GBPINR is expected to weaken towards 102.00-101.80 as long as it trades below 102.60

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