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Rupee heading towards March high of 72.27

Indian rupee could open slightly lower following gains in dollar index. However, the trend remains on bullish side following stronger Asian currencies and in particular Chinese Yuan. The Chinese currency has rallied more than 10% since its 2019 low against the dollar, a magnitude of strength that led to a reversal of uptrends in 2014 and 2018.

The size of the RBI's balance sheet, which is reflective of activities carried out by it in pursuance of currency issue function as well as monetary policy and reserve management, has increased by 6.99% during the nine-month period ended March 31, 2021, as per the annual report. The surplus transfer from the RBI to the government came mostly on account of income earned from sales of foreign exchange. The Forex gains stood at Rs.50629cr in FY21 vs Rs.29993cr in FY20

On Thursday, spot USDINR fell another 19 paise to 72.59, headed for fifth weekly decline following fund inflows, weaker dollar index, risk-sentiments and decline in virus cases. Technically, the pair has support at 72.27 and resistance at 72.77.

Asian stocks look set to rise after solid data and President Joe Biden’s federal spending plans spurred a rally in U.S. cyclical shares. Biden is reportedly set to unveil a budget that would take federal spending to $6 trillion in the coming fiscal year. The 10-year U.S. Treasury yield advanced past 1.6%, a gauge of the dollar was steady and the yen held a decline amid month-end rebalancing.

Dollar Index came under pressure after Fed Vice Chairman for Supervision Randal Quarles said it’s important to begin discussing plans to reduce bond purchases in the coming months as the economy recovers

The U.S. Senate moved toward passage of an expansive bill to bolster U.S. economic competitiveness and confront China’s rise, debating some last amendments before a final vote. The bill includes array of measures directly targeting China- on human rights and its influence in the U.S. -underscoring the bipartisan angst over the rise of the strategic rival.

USDINR

Spot USDINR slides towards march low of 72.27. By looking closely, we can see have not seen reasonable upswing or short covering bounce after forming high of 76.06. The downward slop was steady with out any upswing suggesting continuation of downward momentum

Momentum oscillators and indicators drifting towards oversold zone with bearishness.

USDINR June futures expected to trade with negative bias and we could see level of 72.50 in coming days while 73.40 acts as resistance.

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