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USDINR October futures resumes lower after Holiday following global cues - HDFC Securities 

The yuan’s advance has come after weakness in dollar against major currencies. Overnight, The dollar fell against all of its Group-of-10 peers as U.S. stocks rose on solid corporate earnings. Taking cues from the stronger yuan, rupee likely to open higher after Tuesday’s holiday. However, foreign fund outflows and surge in crude oil prices remain near term worries for rupee.

On Monday, spot USDINR gained 9 paise or 12 bps to 75.35. Technically, it has been overbought on daily and hourly chart indicating near term profit booking. It has support around 75 and resistance at 75.70.

Asia stocks are doing well and bonds are ailing in a classic risk-on market. The latest driver may be news that President Biden is growing more confident in his stimulus plan after talks with lawmakers.

On Tuesday, US Stocks stayed on the front foot with a 75 basis point advance on the S&P 500, while domestic indices, Nifty and Sensex witnessed profit booking. The US Treasury curve steepened notably to reverse recent action, as the long bond yield jumped five basis points to 2.08% while Treasury 10-year yields are up to about 1.66%. Elsewhere, crude oil held near the highest level in seven years amid the global energy crunch.

The dollar held losses amid bets that other central banks will boost interest rates before the Federal Reserve. The offshore yuan was steady after rallied by the most since January in the previous session. GBPUSD rose as much as 0.7% to 1.3816, highest since Sept. 16, in the wake of hawkish moves in gilts on Monday fueled by Bank of England Governor Andrew Bailey’s comments

Technical Observations:

USDINR October futures resumes lower after Holiday following global cues.

Medium term setup for the pair remains bullish while short term weakness cant be ruled out amid overbought conditions on hourly and daily chart.

The pair holding higher top higher bottom formation on daily chart.

It has support at 75.10, the recent top and 74.75, falling trend line while on higher side it faces resistance around 75.80.

Looking at the overall chart structure, we believe USDINR October future could see lower opening but this will be an opportunity for bargain buyer and importers to cover their near term commitment.

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