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Risk aversion to back dollar - HDFC Securities

Indian rupee expected to open slightly higher but we could see lower level buying in dollar following risk-off sentiments across the globe after US considering higher capital gains taxes. Better than expected US economic data and weaker domestic macro likely to weigh on Indian rupee. On Thursday, spot USDINR closed at 74.95 gained 7 paise while today we could start on flat note but we see pair heading towards 75.30 odd levels while support remains at 74.70

The dollar was edged into a narrow trading range on Friday as traders contemplate the next moves by major central banks ahead of a U.S. Federal Reserve meeting next week. The euro tended losses after European Central Bank President Christine Lagarde squashed expectations that policymakers will start to consider a tapering of bond purchases due to an improving economic outlook.

Asian stocks look set to slip following broad based declines in U.S. benchmarks as investors mulled a proposal for higher capital gains taxes. News reported the Biden administration is considering a capital gains tax hike that could take the top rate for those earning $1 million or more as high as 43.4%. Leaving aside questions of whether Congress will pass the proposal, one could argue that taxing the top 1% isn’t enough to change the trajectory of the overall market. Historically, a change in capital-gains taxes has had almost zero prediction power for the stock market’s performance.

Treasuries continued their rally, with the 10-year yield sliding to 1.54% and the long bond declining to 2.22%, its lowest since the beginning of March. The dollar extended its fourth daily advance of April following better job numbers.

In the U.S. signs of a post-pandemic recovery increased as jobless claims fell and airlines signaled the worst of the travel downturn is over. While at India we are still fighting with virus as number of infection rises more than 3 lakhs.

USDINR

USDINR April futures expected to open flat but we expect momentum could shift upward as the session progresses.

.The pair has been sustaining well above major moving averages with higher top higher bottom formation remains intact

Momentum oscillators and indicators well positioned for bullish trend.

The pair is having immediate resistance at 75.50 and support at 74.50.

We remain bullish in USDINR April futures and expect 75.30 to 74.80 range in today’s trade with bullish view

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