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Currency Outlook

Rupee Outlook

• Rupee hit the highest level in last 3-weeks amid strong inflow of funds into the domestic market. Additionally rupee got further support after the US yields remained under pressure ahead of the key CPI print.

• Rupee is likely to appreciate further amid weakness in the dollar and strong domestic inflows. The dovish comments from the Richmond Fed President Barkin has increased the probability of rate cut in March despite higher inflation numbers in December. The CME Fed-Watch tool suggests more than 70% probability of 25 bps rate cut in March. Meanwhile, focus will shift towards domestic CPI numbers due today. USDINR may face the hurdle near 83.20 and move lower towards 82.90. A move below 82.90 would open the doors towards 82.80 mark

Euro and Pound Outlook

• Euro recouped its losses on Thursday, amid retreat in the dollar. Meanwhile, weaker economic numbers from the Eurozone and dovish comments from ECB members weighed on the pair to settle near 1.097. The rate cut probability in the next meeting still holds below 5% suggesting ECB to keep rates higher in the first quarter of 2024. EURUSD is likely to move higher towards 1.10 levels as long as it stays above 1.0930 amid weak dollar and improved risk sentiments. EURINR is likely to rise towards 91.50 as long as it holds above 90.80 levels

• Pound is expected to hold its gains and move towards 1.2800 amid weak dollar and expectation of better GDP numbers. Further, expectation of better economic numbers from the region would also support the pair to hold its gains above 1.2730. GBPINR is likely to rise towards 106.40, as long as it holds above 105.50 level.

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