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Dollar drops as Risk sentiments back in market

Indian rupee expected to open higher as risk sentiments back in market with global equities traded higher after Friday’s plunge. The one month forward USDINR quoting 9 paise lower indicating USDINR June future could open around 74.10

On Monday, rupee depreciated along with sovereign bonds as elevated oil prices continue to fuel worries about inflation and the nation’s finances. USDINR rises 0.3% to 74.1050. The pair touched 74.2850 earlier, it’s highest since May 3. Rupee expected to trade volatile as at one end risk sentiments adding strength while capital outflows and higher crude oil prices weighing on it. Technically, spot USDINR is having resistance in the range of 74.30 to 74.50 where we could see profit booking while on down side the 73.66, the 50 days simple moving average act as support

A gauge of the dollar fell the most since June 4 on speculation Federal Reserve officials will tone down their rhetoric on rate hikes and as commodity prices stabilize. A dollar gauge snapped a six-session winning streak after Federal Reserve Chair Jerome Powell said inflation had picked up but should move back toward the U.S. central bank’s 2% target once supply imbalances resolve. The British pound, meantime, gained as Prime Minister Boris Johnson said England is on track to lift Covid restrictions by July 19.

Asian stocks are set to track a rebound in U.S. equities as the prospect of very gradual policy tightening tempers some of the concerns about the Federal Reserve’s hawkish tilt.

The Federal Reserve’s policy outlook needs to be more attuned to inflation risks, at least according to a chorus of influential voices who spoke Monday, including St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan.

USDINR

USDINR June futures formed Doji candlestick near resistance of 61.8% Fibonacci level indicating indecisiveness.

However, the pair remained well above 50 days simple moving average.

Momentum oscillators and indicators also remains strong on daily chart while on hourly chart it turned overbought indicating near term profit booking.

USDINR June futures has support at 73.80 and resistance at 74.40. The pair is expected to see profit booking in coming days following overbought condition on hourly chart.

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