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Rupee Outlook and Strategy

* The US dollar fell on Tuesday as investors awaited inflation data for further signs of whether price pressures are ebbing and what it means for further Federal Reserve interest rate hikes. Meanwhile, further downside was prevented as the International Monetary Fund trimmed its 2023 global growth outlook and warned that a severe flare-up of financial system turmoil could slash output to near recessionary levels

* Rupee future maturing on April 26 depreciated by 0.13% on Tuesday despite weakness in the dollar

* The rupee is likely to trade with a positive bias amid weakness in the US dollar and FII inflows in domestic equity markets. Further, investors will closely watch CPI data from the US, which is expected to drop from 6.0% to 5.1%. US$INR is expected to trade in a downward trend towards the level of 81.90

Euro and Pound Outlook

* The Euro edged up more than 0.50% yesterday amid a weak US dollar and rise in Germany 10 year’s bond yields. Meanwhile, further upside was capped as retail sales in the Euro Area fell 0.8% from a month earlier in February 2023, following an upwardly revised 0.3% growth in January and matching market expectations. The latest reading added to signs of subdued domestic demand across the bloc due to a combination of stubbornly high inflation, rising borrowing costs and concerns over a potential recession

* The Euro is expected to trade on a bullish note amid weakness in US dollar. Further, the Euro may be supported as French central bank chief Francois Villeroy de Galhau said the European Central Bank will keep fighting excessive price growth even as its policy response is shifting gears. EURINR is expected to continue its upward trend towards the level of 90.00

* The pound appreciated more than 0.30% on Tuesday amid a soft US dollar and sharp rise in UK 10 year’s bond yields. Further, the pound was supported on a rise in risk appetite in global markets

* The pound is expected to trade with a positive bias amid weakness in the US dollar and optimistic global market sentiments. Further, traders will focus on BoE Governor Andrew Bailey’s speech for more cues on the interest rate path. GBPINR is expected to surpass the hurdle of 102.30 to continue its upward trend towards the level of 102.50 in the coming trading session

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