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Dollar sank with US Treasury Yields - HDFC Securities

Indian Rupee expected to open flat to positive taking cues from the Asian currencies. Rupee may trade side way to positive ahead of Mahashivratri holiday. The bias remains bullish for local currencies following strong foreign inflows in primary and secondary market.

On Tuesday, spot USDINR closed at 72.93 down 32 paise. Primary trend for spot USDINR remains bearish until it closes above 73.77, high of March 1, while on downside 72.60 act as support.

The OECD has raised the projection for India’s GDP rate by 4.7% to 12.6% for 2021-22, retaining the

fasted growing tag on back of strong fiscal and quasi fiscal measures and a recovery in manufacturing and construction activities.

Asian stocks looked set to benefit from a rebound in growth shares that sent the Nasdaq 100 to its biggest gain since November. The dollar sank with Treasury yields. A gauge of the greenback fell for the first time in five sessions as yields on 10-year U.S. Treasuries dipped for the first time in a week.

On Tuesday, the dollar declined against all its Group of 10 peers as traders took profits on long greenback bets and risk mounted a comeback, with U.S. equities rallying and Treasury yields declining. Meanwhile, dollar positioning via CFTC remains entrenched near the strongest levels seen over the past decade. Dollar positioning remains very short and exposed to reversals.

Technical Observations:

USDINR

USDINR March futures formed engulfing candlestick after doji candlestick suggesting bearishness.

The pair erased the last two days gain and closed at 20 days exponential moving averages

Momentum oscillators and indicators again turned weak on daily and hourly time scale.

Looking at the Tuesday’s candle and short term technical studies, USDINR March futures expected to consolidate before heading higher. It has support at 72.60 and resistance at 73.80

USDINR March Daily Chart

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