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Currency Outlook

Rupee Outlook

• Rupee pared most of its gains yesterday amid strong dollar demand from domestic corporates. Earlier rupee hit the intraday highs at 83.05 amid weakness in the dollar after the Federal reserve maintained its projection for three rate cuts this year.

• Rupee is expected to depreciate towards the 83.30 mark amid firm dollar. Better than expected US economic numbers and surprise rate cut by Swiss National Bank has supported the dollar to rebound. Meanwhile, increasing probability of rate cut in June would limit any major upside in the dollar. As per the CME Fed-Watch tool, rate cut probability in June has jumped to 70%. Further, improved risk appetite and strong inflows into the domestic markets would also check the downside in rupee. USDINR March likely to face the hurdle near 83.30 and move back towards 83.10.

Euro and Pound Outlook

• Euro gave up its early advances and turned lower amid weaker manufacturing PMI numbers in the region and strong dollar. Eurozone March PMI fell to 45.7 against 46.7. For today, EURUSD is likely to find support near 1.0830 and rise back towards 1.09, on expectation of improved economic numbers from Germany. Further, focus will shift towards outcome from Euro Summit. EURINR March is likely to find support near 90.20 and move towards 90.80. Only close below 90.20 it would test 90.00.

• Pound lost almost 1% after BOE kept its benchmark rates on hold as expected. It fell after all the members voted for no hike in interest rates. The pair is expected to move in the range of 1.2630 and 1.27. Forecast of weakness in retail sales numbers could weigh on the pair, where as improved risk appetite could limit its downside. GBPINR March is likely to move towards 105.20, as long as it trades under 105.70. Only a move below 105.20 it would slip towards 105 level.

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