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July began in the same vein that June had ended

July began in the same vein that June had ended; equities powering higher, the dollar continuing to rally, crude oil hovering around $75/barrel and US Treasuries remaining fairly subdued. The era of super loose monetary policy is by no means over, but the gradual move towards policy stance has undoubtedly begun. The dollar rally in Q1, followed by a subdued April and May, the greenback has once again been on the front foot in June, as the market hawkishly reprices its expectations for US monetary policy.

Indian rupee depreciated 2.35% or 171 paise to 74.33 a dollar in June month diverging from historical appreciation. The slower economic recovery, surge in dollar and crude oil prices weighed on domestic unit. The dollar index, basket of six currencies, gained 2.90% to 92.44 level in last month after hawkish commentary from Fed members.

Technically, spot USDINR is forming megaphonic patter with higher highs and lower lows. In near term, the pair is having support at 73.70, the previous resistance and on higher side 75 will be challenged once the level of 74.50 crosses. The bias for pair remains on bullish side with any dip below 74 could be a buying opportunity.

India’s forex kitty surged to all-time high as it rose by $5.066 billion to touch a record high of $608.999 billion in the week ended June 25, the RBI data showed on Friday.

Foreign institutions remained net buyer of $1.78 bn in the month of June with equities fetching $$2.36 billion while in debt market they sold worth $657mn. In coming month, there could be 11 IPO’s lined up in July month which will support the stronger rupee while strength in dollar index and crude oil price put pressure on it.

Dollar Index has enjoyed a strong start to July as monetary policy divergence and those with a short position started to exiting. High volatility may once again be the name of the game in FX this month as we have three central banks meeting for policy decision and with rise in commodity prices worries over inflation and tapering will be in focus.

USDINR

USDINR near month futures registered fourth weekly gains in row and back to April levels.

The pair is oscillated between 72.33 to 75.50 in last three months. The pair has been trading in rising channel with “W” in formation considered as bullish pattern. The pair is also forming higher highs and lows on weekly chart.

Momentum oscillator, Relative Strength Index of 14 weeks period heading north ward and sustaining above 50 level suggesting continuation of bullish momentum.

We remain bullish in USDINR July futures and dip will be bought for higher side target of 75.50 and 76.50.

Monthly Range : 76.50 to 73.50

EURINR

EURINR near month futures formed “Doji candlestick” pattern on weekly chart near 21 DEMA indicating indecisiveness among traders.

The pair is flirting near the 50% Fibonacci retracement adjoining low of 85.31 and high 90.82.

The pair is trading below 55 Weeks Exponential Moving average (EMA) while holding the support of 21 Weeks EMA

Looking at the chart structure bias for EURINR futures remains neutral until it falls below 88 or trade above 89.50. The level above 89.50 opens 91 while trading below 88 drags pair towards 85.50.

Monthly Range : 90 to 86

GBPINR

GBPINR near month futures has formed “Doji candlestick pattern at 13 Days Exponential Moving Average(EMA).

Short term trend for the pair remains bullish as it has been sustaining well above short term moving averages with higher top higher bottom in place.

Momentum Oscillators and Indicators on daily and weekly charts are heading north but the momentum get slower with negative divergence.

The medium term trend remains bullish till it holds the level of 102.30 while on higher side above 104 we can see extension of rally towards 105.50

Monthly Range : 101.50 to 105.50

JPYINR

JPYINR futures has double bottom horizontal line support around 66.20 while it has resistance around 69, the downward slopping trend line.

The pair has been trading with negative bias following lower highs and lows on monthly chart.

Momentum oscillator, Relative strength index of 14 week period has been hovering around 44 with positive divergence suggesting short covering bounce.

The above evidences suggest JPYINR future expected to trade with negative bias and any short covering bounce to 69 level considered as selling opportunities

Monthly Range : 69 to 66

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