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Rupee Outlook and Strategy

• The US dollar index remained largely unchanged yesterday as investors stay cautious ahead of next week’s key FOMC meeting. The rise in US treasury yields to a one-week high has provided some support to the dollar. Also, better-than-expected US trade balance numbers supported the dollar to stay above the 104 mark

• The rupee maturing on June 27 appreciated by 0.11% on Wednesday amid a soft dollar

• The rupee is likely to remain under pressure ahead of key RBI policy due today, where the central bank is likely to keep rates unchanged. However, rising probability of no hike in June and expectation of disappointing weekly jobless claims data from the US could hurt the dollar. US$INR is expected to face a hurdle near 82.80 and move back towards 82.40. Only a close below 82.40 would weaken the pair towards 82.20

Euro and Pound Outlook

• The Euro remained under pressure on Wednesday amid a weaker set of economic numbers. German industrial production rose 0.3% MoM, weaker than expectation of gain by 0.7% MoM. Meanwhile, hawkish comments from the ECB helped the common currency to stay close to the 1.07 mark

• The Euro is likely to hold its ground and bounce back towards 1.0730 on expectations of an improvement in key economic numbers and a soft dollar. Further, expectation of a rise in interest rate by the ECB could also support the pair. The Euro is expected to hold support of 200 day EMA near 1.0670 and move towards 1.0730. EURINR is likely to hold the support near 88.30 and move back towards 88.80

• The pound edged lower on Wednesday amid weakness in key economic numbers from the UK and a firm dollar. The Halifax house price index remains unchanged against expectation of growth by 0.2%

• The pound is expected to consolidate in the range of 1.240-1.2480. The pair could find support near the 50 day EMA at 1.24. Only a move above 1.2480 would bring fresh buying interest in the pair and push it towards 1.2520. GBPINR is likely to consolidate in the range of 102.40-103.00

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