On expectations of better inflows, can the Indian rupee tender well?

Amid the reversion of risk-averse sentiments and stable dollar index, rupee is expected to tender well. Continue reading to know more.

Today the USD/INR opened 10 paise higher in the domestic market. Amid the divergence in developments, Asian currencies were mixed against dollar. As investor turned their focus on the upcoming data from the US labour market, on Friday, Asian stocks were also mixed. Having said that, with upcoming rise in the cases of Omicron (a novel COVID-19 variant), Southeast Asia is now on high alert. Hence, the dollar edged slightly lower and even the oil ascended on supply constraints to a seven-week high.

Even the Yen gave up some of its gains in the overnight trade. Spells of hedging and speculative flows witnessed impacting the price action. Ahead of the US jobs data, the equity market witnessed some roughness which in turn complemented the implied volatility in 10-year government yields that remained elevated overnight. Rising yields on gilts made the Pound fall 0.2% to 1.36 supporting the Pound/Euro pair. The hawkish stance from the US Fed on Thursday pushed the US Treasury bond yields above 1.7%. This also helped the spot USD/INR to gain around 14 paise.

Moreover, ahead of weekly expiry, the January futures of USD/INR formed a Doji candlestick pattern signifying indecisiveness among traders. The support level for the pair as of now would be 74.10, whereas the resistance would be around 100, 50 and 20-Day Exponential Moving Averages (EMA). Even though, the Moving Average Convergence and Divergence (MACD) has headed slightly northwards but is still hovering in the negative territory. On the other hand, the Relative Strength Index (RSI) have inched out from the oversold zone but is still flattened suggesting consolidation. In the near term, we expect the pair to oscillate around 74.50. The overall technical setup of USD/INR remains bearish and in the short-term 74.70 to 74.10 would be the range of consolidation.