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Rupee Likely To Open Lower On Risk-off Moods - HDFC Securities 

Indian rupee expected to open with minor gains following weaker dollar index and continuation of foreign fund inflows in domestic equities. Rupee’s movement in the last three trading sessions has reinforced the view that the currency remains mired in a narrow trading range on back of central bank’s intervention even after higher inflows and carry. The one month forward USDINR at the time of writing quoted at 73.15 a paise lower from yesterday’s price while dollar index trading around 90.50.

On Tuesday, rupee gained 8 paise to settle at 72.89 against the US dollar, gaining third day in row, on the back of sustained foreign fund inflows and weak American currency. However, surging crude prices and subdued domestic equity market could hit the rupee sentiment and restricted the gains.

The primary trend for USDINR remains down with immediate support at 72.70 followed by 72.40 while resistance at 73.33 levels, the 50 days SMA. Higher forward premia's of around 5.12% are also inviting carry traders.

Asian stocks looked set for a mixed start after their U.S. peers halted a six-day winning streak as investors contemplated whether commitments by the Federal Reserve and the Biden administration to let the economy run hot will spark destabilizing inflation. Elsewhere, WTI crude rallied for a seventh straight day to $58.5 a barrel, up 58% from the end of November. China's PPI turns positive at 0.3% for the first time since January 2020. CPI declined 0.3% in January as compared with a year ago.

Investors are awaiting a speech by Federal Reserve Chair Jerome Powell and U.S. inflation data due this week to ascertain the greenback’s near-term direction.

USDINR

USDINR February futures formed small body suggesting consolidation near 73 odd levels.

The pair has been trading well below short term moving averages and has resistance at 73.38, high of February month.

Momentum oscillator, RSI is hover around sub 50 indicating consolidation in USDINR.

Near term range for USDINR Feb. fut. Is 73.15 to 72.70.

We remain bearish in USDINR February futures and expect it can move towards 72.90 followed by 72.70 before giving any sustainable buying interest.

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