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Dollar Calm Ahead of Fed Decision

USDINR gained for six consecutive session after April where it appreciated more than Rs.2 while this time it added only 50 paise suggesting slower momentum. Rebound in dollar index, weaker domestic macro and higher crude oil prices weighed on rupee in last couple of days.

Forward markets indicated USDINR could open in the range of 73.30 to 73.25 range. The momentum remains on bullish side as it closed well above short term moving averages along with stronger oscillators. The pair has resistance at 73.50 and 73.80 while continue to hold support around 73.

India’s trade deficit in goods stood at $6.28 billion, the lowest in eight months. The trade deficit was $15.10 billion in April and $3.15 billion in May 2020. Imports in May were up 73.64% year-onyear to $38.55 billion while exports in May increased by 69.35% from a year ago to $32.27, data showed. Stringent restriction at state level in May shrink the imports of petroleum products, helped in narrowing the trade deficit to eight month low

Asian stocks looked set to slip after their U.S. peers retreated from all-time highs amid mixed economic data and a two-day Federal Reserve meeting. Crude oil traded at the highest level since 2018. Brent crude oil prices hovering around $75/barrel.

The 10-year Treasury yield lingered near 1.5% for most of the U.S. day after Commerce Department figures showed retail sales declined in May. Producer prices further stoked price pressures, rising more than expected in May.

The dollar index steadies around 90.50 ahead of the conclusion of the two-day Fed meeting starting today. On Tuesday, a gauge of the dollar rose in a risk-off session. The greenback has become increasingly sensitive to Fed meetings and inflation numbers. The central bank has largely succeeded in easing inflation expectations, with breakeven rates retreating from mid-May peaks. Unexpected language, possibly regarding jobs and commodities, could send yields higher.

USDINR

USDINR June futures closed well above short term moving averages.

The pair sustained above 21 DEMA and marked gain for the six session in row.

Momentum oscillators and indicators also turned positive on daily and hourly chart suggesting recovery in the pair.

The pair is expected to consolidate in narrow range in today’s trade after gaining for six days in row.

USDINR June futures near term outlook remains bullish with level above 73.56 open’s way to 73.80 to 74 while the support has been shifted from 72.70 to 73.20.

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