ICICI Direct expects USDINR to meet supply pressure at higher levels. Utilise upsides in the pair to initiate short positions.
ICICI Direct's currency report on USDINR
Spot Currency
The rupee ended lower sustaining losses of 13-paise against US$ amidst geo political escalation between India and Pakistan. However with recovery in major currencies we expect Rupee to remain supported in backdrop of lower oil prices • The dollar further extended losses against Euro and GBP while JPY too rose against US$. Directions of US-China trade talks as well as global uncertainty around Brexit continues to rule the roost. Any positive outcome in trade talks as well as clarity on Brexit would improve risk on sentiment. However UK Pm said that UK won’t exit the bloc without parliament’s agreement.
Benchmark yield
Government bonds declined on Tuesday. Although Crude oil prices have seen a decline, eruption in geo political crises between India and Pakistan would weigh on domestic debt • US treasury yields declined amidst rising expectations that Fed may continue to remain dovish. Overall, the upcoming US economic data as well as direction of trade talks will provide cues for rate hikes.
Currency futures on NSE
The dollar-rupee March contract on the NSE was at 71.32 in the previous session. March contract open interest increased 31.80% in the previous session • We expect the US$INR to meet supply pressure at higher levels. Utilise upsides in the pair to initiate short positions.
Intra-day strategy
| US$INR March futures contract (NSE) | View: Bearish on US$INR |
| Sell US$ in the range of 71.40 -71.46 | Market Lot: US$1000 |
| Target: 71.20 / 71.10 | Stop Loss: 71.59 |
| Support | Resistance |
| S1/ S2: 71.30 / 71.15 | R1/R2:71.45 /71.65 |
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