Rupee likely to appreciate as crude oil prices ease

Amid easing crude oil prices and a softer dollar, the rupee will likely appreciate. Read on to find out more.

The dollar index on Wednesday slipped almost 1.16% amid the sentiments in the financial markets turn optimistic. After an initial rise on Thursday, the dollar index again moved further downwards losing almost 0.16% in the initial trade. Having said that, it is still trading above Wednesday’s close. As the JOLTs job openings data from the US came out higher than what was anticipated, it has provided some cushioning to the dollar index.

On the back of muted crude oil prices and the soft dollar index, the March futures of USD/INR pair soared by almost 0.41%. However, on the flip side, the continued outflows from domestic markets by the Foreign Institutional Investors (FII) is contributing to the pressure on the Indian rupee.

The Euro would likely carry a positive bias with weakness witnessed in the dollar. Furthermore, speculations are rising around the announcement of the new defence and energy stimulus package from the European Union. This might continue to boost the Euro. However, on the other side of the coin, it is expected that the European Central Bank (ECB) would be delaying the tightening of the monetary policy, which might, in turn, put pressure on the Euro. Having said that, the march futures of EUR/INR pair is likely to rally further towards 84.8 levels.

Rupee is likely to appreciate as the crude oil prices have eased out and even the dollar has depreciated. Having said that, the global markets might continue its support towards Indian rupee, due to the rise in their risk appetite. On the other hand, it is anticipated that the consumer price reading from the US would be on the higher end and is likely to provide some cushioning to the dollar. The march futures of the USD/INR pair is likely to move towards 75.82, while on the upside, 76.33 to 77.16 would act as resistance. Moreover, it is taking very good support at its 10-Day Exponential Moving Average (EMA).

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