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Rupee is Likely to Open Higher As Risk Assets Recovers

• The Indian Rupee could open higher taking cues from stronger regional peers and overnight weakness in the dollar index with a fall in US treasury yields. The rebound in risk assets also supportsthe local unit.

• On Wednesday, spot USDINR closed at 81.94 after touching an intraday record high of 81.96. Technically, the pair has been highly overbought on the daily chart warranting near-term consolidation and profit booking. The pair is having support at 81.10 and resistance at 82.

• Asian equities jumped on Thursday following the strongest day for US stocks since early August after the Bank of England unveiled a bond-buying program that triggered a global rally in government debt. The rally in riskier assets was triggered by the BOE’s plan to purchase up to £65 billion ($71 billion) in UK government debt over the next two weeks.

• A gauge of the dollar rises in early Thursday trade after having the steepest drop in more than two years on Wednesday. The dollar Spot Index rises 0.7%. It slid 1.32% Wednesday, themostsince March 2020 on a closing basis.

• US Treasuries rallied Wednesday while a dollar index fell by the biggest margin since the early weeks of the pandemic. Treasuries were a little changed Thursday. The amount of money that investors are parking at a major Federal Reserve facility climbed to yet another all-time high as funds sought out places to stash short-termcash.

• European Union officials unveiled fresh economic limits on Russia in response to the further annexing of Ukraine. The new round of sanctions would bar sales of Russian oil by third-party countries beyond a set price cap.

Technical Observations:

• USDINR October futures contract has upward slopping channel resistance around 82.40 on the weekly chart.

• The pair has parabolic up move in the last couple of days and placed above 2 standard deviations of 21 days average indicating an overstretch.

• It has been holding a bullish set-up of higher top higher bottom on all major time-span charts.

• Momentum oscillators entered in the overbought conditions and the spread between the oscillator and average line widened, indicating near-term consolidation.

• USDINR October contract has resistance at 82.40 and 82.90 while support has been placed in the area of 81.40 to 81.10.

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