Sell USDINR; target of 64.95 - 64.85: ICICI Direct

ICICI Direct's currency report on USDINR

Spot Currency

The rupee strengthened even though domestic equities slid as weakness in the US $ supported gains in emerging as well as major currencies . However, sharp gains would be limited in the face of escalation in global trade wars • US $ ended with mild gains but is trading currently lower as fears on a trade war remain a concern . Despite a deal with South Korea during the weekend, Chinese retaliatory actions will be crucial . The JPY rose as volatility increased on the back of safe haven demand.

Benchmark yield

Sovereign bonds remained largely unchanged before the release of borrowing plans for the first half of the coming fiscal . extended gains amid a slump in global yields as well as receding risks of faster rate hikes since the FOMC monetary policy meeting • US 10 - year yields remained almost flat at 2 . 82 % as risks of a trade war escalation may have an impact on global economic growth . Also, a sharp escalation in risks may see the Fed turning cautious.

Currency futures on NSE The mid month dollar - rupee April contract on the NSE was at 65 . 30 . The April contract open interest increased by 33 % from the previous day • We expect the US$INR to meet supply pressure at higher levels . Utilise upsides in the pair to initiate short positions.

Intra-day strategy

US$INR April futures contract (NSE)	View: Bearish on US$INR
Sell US$INR in the range of 65.18 - 65.24	Market Lot: US$1000
Target: 64.95 / 64.85	Stop Loss: 65.36
Support	Resistance
S1/ S2: 65.10 / 64.90	R1/R2:65.25 /65.35

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