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Currency Outlook

Rupee Outlook

• Rupee depreciated to its lowest level in last two months on Wednesday amid weakness in Asian currencies and dollar demand from importers. Rupee settled at 83.15 against its previous close at 83.03.

• Rupee is expected to appreciate back towards the 83.00 mark amid weakness in the US dollar after the US Federal Reserve maintains 75 bps of rate cut this year. After the Fed policy the probability of rate cut in June has jumped to 73%. Further, improved risk appetite and correction in the US dollar on forecast of mixed economic numbers from US would also weigh on the dollar and support the rupee. USDINR March likely to move back towards 83.00, as long as it trades under 83.20. Only a move below 83.00 it would test the next support at 82.90.

Euro and Pound Outlook

• Euro recovered from its 2-week low and posted moderate gains after the FOMC meeting. Euro also found support the after the ECB president signaled they are not in hurry to cut the rates in June. For today, EURUSD is likely to rise towards 1.0960, as long as it holds above the 1.090 mark. Meanwhile, expectation of contractional the manufacturing activity in the region could cap its upside. EURINR March is likely to find support near 90.60 and move towards 91.25. Only close below 90.60 it would turn weaker.

• Pound also gained more than 0.50% yesterday amid correction in the dollar. Further, sticky inflation numbers in the region also increased the bets that the BOE will hold the rates higher. The pair is expected to find support near 1.278 and move towards 1.2850 on expectation of no change in the monetary policy from the BOE. GBPINR March is likely to move towards 106.50, as long as it holds above 105.80. Only a move below 105.80 it would slip towards 105.50 level.

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