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FUNDAMENTALS OF CURRENCY:

The U.S. dollar rose across the board to hit a four-week high against a basket of currencies on Friday, as data showing the COVID-19 pandemic's continuing toll on the economy boosted demand for the safe-haven currency. U.S. retail sales fell for a third straight month in December amid job losses and renewed measures to slow the spread of COVID-19. Weak data dragged U.S. Treasury yields lower and U.S. stocks fell as investors turned more risk-averse on Friday.

The Euro was carrying its largest weekly loss for nearly three months on Friday after capitulating previously at what were new multi-year highs for or the thetrade-weighted trade-weigh single inl currency, rren only now the Euro-to-Dollar rate may need a rally from either the Pound or Chinese Yuan to now the Euro-to-Dollar rate may need a rally from either the Pound or Chinese Yuan to other factors for weakness in the Euro includes prolonged ‘lockdown,’ a _ slower pace of vaccination and political uncertainty in Italy, although ifFuropean Central Bank (ECB) concerns about currency strength weren't also in the mix they almost certainly will be upon any eventual rebound by the Euro-to-Dollar rate.

Looking ahead to next week, while the UK’s vaccine rollout has been helped underpin GBP despite the elevated number of virus cases, market sentiment will likely remain the key driver in the short term for the currency. Domestic data will be worth watching and particularly the UK PMls, which provides a more timely update regarding the UK economy. Although, with the services sector likely to remain in contractionary territory, eyes will be on the manufacturing sector,which will be the first look at business sentiment post-Brexit. 

Technical indicators (Daily):

* RSI- 45.6903

* MACD- 0.2922

* MOVING AVERAGES (20,50,100)- (74.0949/73.8729/74.0757)

USDINR TECHNICAL CHART

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