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Rupee Oscillating around 78

* Rupee is likely to open on a flat note following a steady dollar index. However, improvement in risk sentiments and a stronger Chinese currency could help the local unit to add gains. Broadly, the rupee has been in a consolidation zone with a range of 77.70 to 78.30.

* On Monday, Indian bonds rallied, while the rupee gained as crude oil prices trade around the lowest in a month, potentially easing the burden for the net oilimporting nation. The benchmark Indian 10-year yields fell 12bps to 7.43%, the most in over a month; down 19 bps in the last two trading sessions. Foreign buying of India's bonds accelerated in the past week as a 5-day moving average of net foreign inflows increased to $28.6 million, rising above the 20-day average of $4 million in outflows. Rupee gained 10 paise to 77.98 a dollar.

* Stocks climbed in Asia on Tuesday as US equity futures pointed higher amid steadier investor sentiment compared with last week’s rout in global shares.

* The greenback weakened against all of its Group-of-10 peers as haven demand declined due to a lack of trading incentives stemming from the US holiday and caution ahead of testimony from Federal Reserve Governor Jerome Powell later this week. ICE Dollar Spot Index dropped 0.05% after rising last week to the highest since April 2020 Cash Treasuries were closed for a US national holiday on Monday.

* In commodities, oil gained, while prices for metals like copper are being buffeted by concerns about the demand outlook amid weakening global growth.

* President Emmanuel Macron became the first president in decades to fail to garner an absolute majority in parliament, meaning he will have a hard time passing legislation, putting much of his agenda in peril.

* Prime Minister Fumio Kishida said that BOJ Governor Haruhiko Kuroda expressed his concern over currency movements during a meeting, a comment that briefly strengthened the yen on Monday.

Technical Observations:

* USDINR June futures formed candle with a small body, taking cues from global cues.

* The pair is having support at 77.88, the middle band of the Bollinger band and resistance at 78.28.

* The pair is holding a bullish sequence of higher top higher bottom on daily and weekly time frames.

* Derivative data are indicating long unwinding as the price fell along with open interest and volumes.

* Relative Strength Index of 14 days oscillating exited from overbought zone and given negative cross over indicating weakness.

* USDINR June futures is expected to trade in the range of 77.80 to 78.10.

USDINR June Daily Chart

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