The Indian rupee is expected to depreciate on Tuesday on the back of strong dollar and risk aversion in global markets. Market sentiments are hurt on worries over supply chain disruption due to Covid-19 lockdown in China, escalating geopolitical tensions in Ukraine and major central banks across globe adopting aggressive monetary tightening policy to combat inflation. “Traders will remain vigilant ahead of inflation data from country. However, a sharp fall in rupee may be prevented on softening of crude oil prices. US$INR (April) is expected to trade in a range of 75.90-76.30,” said ICICI Direct. In the previous session the local unit settled almost flat at 75.94 (provisional) against the US dollar as weak domestic equities negated the impact of easing crude oil prices.

“Rupee witnessed pressure against the dollar, after some days of narrow range consolidation. The dollar was hovering around two year highs, still supported by higher U.S. Treasury yields.  The dollar has received the benefit from a hawkish Fed, which lifted interest rates by 25bps at its March meeting and looks set to continue hiking as the year progresses. Market participants will focus on important inflation number from U.S. and on domestic front; which if reported above expectations it could further support the move in Dollar. We expect the momentum for the USDINR would continue to quote in the range of 75.80 and 76.25.”

“USDINR 27April futures contract unable to sustain above 76.0600 and slipped again. On the weekly technical chart, a pair is trading above its resistance level of 75.8000. As per the weekly technical chart, we observed that a pair is sustaining above 75.8000 levels and technical indicators are showing positive momentum in the pair. Looking at the technical set-up, if a pair cross and sustain above 76.0600; could show further strength towards 76.3500-76.5500 in the upcoming sessions. We suggest for closely watching the level of 76.0600 in today’s session for taking any positions in the pair.”

“Dollar rupee likely to trade firm as dollar index again trading above 100 mark supported by high U.S. yields ahead of inflation data that is expected to show U.S. prices gained the most in over 16 years, reinforcing expectations of aggressive Fed tightening policy. On chart, USDINR near month future is trading with sideways trend where support is placed around 75.68 levels. While on higher side, resistance of 21 days Exponential Moving Average (EMA) seen near 76.21 levels, sustain above which may turn trend to positive from sideways. Taking into consideration rising yields, strong dollar, pricey crude oil price and fIIs outflows. We are looking USDINR future to trade in a range of 75.70 to 76.34 levels with high volatility, where any dips towards 75.90 marks may be utilized as trading opportunity by keeping stop loss below 75.70 levels.”

“USDINR has become quite choppy. Intra-day breakouts and breakdowns are failing as external factors remain mixed. On one hand, surging yields and strong US Dollar Index are positives for the pair but on the other hand, weak oil prices are a negative. Post RBI policy section of the market has begun to bet that RBI is going to intervene aggressively if Rupee shows signs of weakening, as it can hurt inflation management. Such times are suitable for option sellers and hence we are preferring to focus on strategies like short straddles and strangles over long/short futures. Hedged traders can opt for iron fly or iron condor.”