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Currency Outlook

Rupee Outlook

* Rupee depreciated yesterday amid month end dollar demand from importers and weakness in other major Asian currencies. Meanwhile, rise in risk appetite in the domestic markets and softening of crude oil prices prevented further fall in rupee

* Rupee is likely to depreciate today amid firm dollar ahead of US FOMC meeting. US Federal Reserve is likely to strike a hawkish tone and keep interest rates unchanged. More focus will be on comments from central bank to get fresh cues on interest rate trajectory. Investors have already pair back bets of Fed rate cut this year due to upbeat economic data and stubborn inflation figures. USDINR May likely to find support near 83.40 level (10-Day EMA) and rise towards 83.65 levels. A sustain break above 83.65 level pair may further rise towards 83.75 levels.

Euro and Pound Outlook

* Euro rose by 0.28% yesterday amid weak dollar and as inflation in Germany rose more than expected in April. Moreover, hawkish comments from ECB Governing Council members Knot and Wunsch boosted the euro. For today, EURUSD is likely to face the resistance near 1.0740 level and slip towards 1.0670 level amid firm dollar and divergence in monetary policy between US Fed and ECB. Moreover, investors will remain vigilant ahead of slew of economic data from euro zone to gauge economic health of the region. EURINR May is likely to slip towards 89.20 levels as long as it trades below 89.70 levels (200-Day EMA).

* Pound is expected to face resistance near 1.2580 level and slip back towards 1.2500 level (20-Day EMA) amid strong dollar. Further, market expects BoE to start cutting rates in August, while the Fed is expected to wait until later in the year. GBPINR May is likely to move south towards 104.20 level as long as it stays below 105.00

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