Rupee is likely to depreciate today due to strong dollar and rise in US treasury yields - ICICI Direct
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Currency Outlook
Rupee Outlook
* Rupee ended on a negative note yesterday falling to its weakest level on record on strong dollar and escalating tension in Middle East
* Rupee is likely to depreciate today due to strong dollar and rise in US treasury yields. Dollar and Yields are moving north as stronger than expected retail sales data from US reinforced expectations that US Federal Reserve could delay its first interest rate cut this year. Market now expects first rate cut to happen in September and also expect central bank to make fewer cuts than previously estimated. Moreover, rupee may slip on risk aversion in the global markets and surge in crude oil prices amid escalating tension in Middle East. Additionally, investors will remain vigilant ahead of US Fed Chair Powell speech to get fresh cues on rate trajectory. USDINR April likely to hold the support near 83.38 (10-Day EMA) and rise towards 83.58 level.
Euro and Pound Outlook
* Euro slipped by 0.13% yesterday and posted 5-month low amid strong dollar and pessimistic global market sentiments. Further, euro slipped as several ECB policymakers expressed their support for interest rate cut in June. For today, EURUSD is likely to slip further towards 1.0570 level as long as it trades below 1.0660 levels amid firm dollar, risk aversion in the global markets and divergence in monetary policy. Meanwhile, expectation of improved economic data from euro zone may prevent sharp fall in single currency. EURINR April is likely to move further south towards 88.60 levels as long as it trades below 89.15 levels
* Pound is expected to slip towards 1.2370 levels as long as it trades below 1.2450 levels amid strong dollar. Further, investors will remain cautious ahead of labor data to determine how soon BoE will cut interest rates. Additionally, market is also watching commentary from BoE officials. GBPINR April is likely to slip further towards 103.60 level as long as it stays below 104.35 level.
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