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Rupee Outlook and Strategy

• The US dollar edged lower to a more than one-week low on Monday as investors continued to price in interest rate cuts this year by the Federal Reserve after a widely expected rate increase at next week's policy meeting. Further, the dollar fell on a sharp decline in US 10 year’s treasury yields

• Rupee future maturing on April 26 appreciated by 0.17% on Monday amid uptick in domestic equity markets

• The rupee is likely to trade with a positive bias amid weakness in US dollar and optimistic domestic market sentiments. The dollar may further abate as US housing data is expected to show weakness in the sector and consumer confidence data is likely to show households are likely to remain cautious given inflation is still elevated and borrowing cost are high. US$INR is expected to break the level of 81.85 to continue its downward trend towards the level of 81.70

Euro and Pound Outlook

The Euro appreciated more than 0.50% yesterday amid a weak US dollar and rise in German 10 years bond yields. Meanwhile, further upside was restricted as French ECB policymaker Francois Villeroy de Galhau said, the European Central Bank has already gone most of the way in raising interest rates to tackle inflation, adding any further rate hikes needed to be limited in number and size

• The Euro is expected to trade on a bullish note amid softer US dollar. Further, single currency may be supported as Bundesbank said the German economy is likely to have expanded in the last quarter on a rebound in industrial production. EURINR is likely to continue its upward trend towards the level of 90.50

• The pound edged up by 0.35% on Monday trading close to a 10-month high hit earlier this month amid weak US dollar and uptick in UK 10 years bond yields. Further, the pound was supported as markets expect the Bank of England to continue tightening its policy to bring down inflation

• The pound is expected to trade with a positive bias amid weakness in the US dollar. GBPINR is likely to rally till 102.20 levels as long as it sustains above 101.70 levels. A sustained break above 102.20 level will open the doors for 102.50/102.60 levels

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