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USDINR expected to open higher on stronger dollar index

* The overnight strength in dollar ahead of FOMC decision and regional risk-averse moods could be enough for USDINR to open higher at domestic bourses. The forward market indicating USDINR could open 20 paise higher and expected to bid well ahead of holiday. Indian markets will remain shut on account of Republic day Holiday.

* The Indian rupee was the worst performer among Asian currencies on Monday as local shares slid for a fifth session, raising worries over foreign fund outflows. Spot USDINR closed at 74.57 with gain of 14 paise or 0.2%, rose as much as 0.4%. Risk sentiments soured further on Monday, with equity markets remaining under sellers in control as domestic benchmark index plunged through key support levels while safe haven currencies bided well on back of geopolitical worries. Ahead Fed Meeting, any uncertainty over geopolitical will be converted in dollar rally.

* Spot USDINR is expected to trade with positive bias on back of geopolitical worries and hawkish federal reserves. From level perspective, derivative data indicating USDINR likely to trade between 74.50 to 75 in coming days.

* A gauge of the dollar rose to its highest level in two weeks amid market jitters as leaders in the North Atlantic Treaty Organization looked to deter Russia from military action against Ukraine.

* Asian stocks and U.S. equity futures declined Tuesday after breathtaking volatility on Wall Street stoked by concerns over Federal Reserve policy tightening and geopolitical tension. Elsewhere, Treasuries were mixed, with the benchmark 10- year yield inching lower. Oil stabilized after getting swept up in the bout of risk aversion.

USDINR January Daily Chart

Technical Observations:

* USDINR January futures reclaimed the 21 Days Exponential Moving Average (DEMA) and yet to surpass the major hurdle of 55 DEMA. The pair is expected to surpass the 55 DEMA in today’s trade.

* Momentum oscillator, Relative Strength Index of 14 days heading north and currently placed near 50 level.

* MACD has given positive cross over and heading towards zero line indicating short term trend reversal.

* Ahead of the January month expiry, long rollover has been seen with rise in price and volume.

* USDINR January futures expected to trade higher and level above 74.80 will open 75.30 while on downside support remained at 74.30.

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