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Dollar Fell with UST Yields

Indian rupee has a favorable platform for a green finish this week as overnight weakness in dollar index and surge in US indices will support in today’s session. The non deliverable forward USDINR last quoted at 73.40 down around 11 paise from Indian closing. Decline in virus cases, weaker dollar index and foreign fund inflows have been supporting rupee gains. Unless something comes out of left field to disturb the mood, Friday looks set to be a range trading session, with a positive bias for risk assets and rupee.

On Thursday, spot USDINR closed at 73.11 level 6 paise down from previous 73.17. Technically, the pair has support at 72.87 followed by 72.77 while continue to resist around 73.40 odd levels.

From the data docket, India’s central bank to hold reverse repo, govt bond auctions and release weekly foreign exchange data.

Remarkable dollar weakness helped to spur some animal spirits for risk assets, as the S&P 500 and Nasdaq 100 indices rallied by 1.1% and 1.8%, respectively, to sit higher by 11% and 5% so far this year. US Treasury's also caught a bid, with the 10-year yield falling four basis points to 1.63%. Dollar index, basket of six currencies, drifted below 90 and last quoted at 89.76,heads for weekly loss.

US jobless claims data also boosted sentiment on Thursday. The number of first-time claims for unemployment benefits for the week ended May 15 came in at 444,000, the lowest since March 14, 2020, the Labor Department reported.

Further positive leads appeared thanks to a cease fire between Israel and Hamas and cryptocurrencies appear to be steadying after their latest 15 minutes of fame.

USDINR

USDINR May futures erased all April month’s gain closed at weakest level.

There has been negative cross over of 21 days and 34 days moving average.

The formation of lower top lower bottom suggesting continuation of down trend.

Momentum oscillator, RSI has been drifting towards oversold zone suggesting continuation of weak trend.

We continue to remains bearish until pair starts trading above 74.20 level. In near term, USDINR May futures may consolidate in the range of 72.70 to 73.50.

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