Dollar/Rupee extended its recent gain on fears Fed may hike rates in near term

Dollar/Rupee extended its recent gain on fears Fed may hike rates in near term

Dollar/rupee opens at 10-week high on fears Fed may hike rates in near term and the dollar index traded up Friday after New York Federal Reserve President William Dudley said the US economy could be strong enough to raise interest rate as soon as June.

Federal Reserve Chairman Fischer remarked that the US required faster potential economic growth in order to lift the long-run equilibrium interest rate.

Fischer did not comment on the likelihood the Fed will raise interest rates again in June.

Technical

USDINR turned bullish after breaking out a short term consolidation. Since 29 April 2016 pair has been traded in between 66.55-67.30 range. 

A long bullish candle stick formation on EOD chart, and closing above the 38.2% Fibonacci is also supporting for bullish view in USDINR. 

Hence, any dip towards 67.20-67.30 is expected to give opportunity to build up long position for the target 67.55-67.80.

Dollar Index had a mixed trading

Dollar index, which tracks the strength of the greenback against a basket of six currencies, traded up at 95.26 during early Asian trade compared to 95.19 at close New York time.

Federal Reserve Bank of New York President William Dudley said Thursday the central bank's next rate rise has a decent chance of happening this summer.

In remarks prepared for delivery at a conference hosted by the Federal Reserve Bank of New York, Fischer praised the contributions of one highly influential economist to monetary policy theory. But his remarks were largely academic in nature, and he made no comments on the economic or monetary policy outlook of Fed.

Technical, a shooting star candle stick on the daily chart is suggesting for bearish reversal in dollar index. However, fundamentals factor is yet indicating for further upside move in dollar index.

Near term support is seen at 95.10 and sustain trade below only dollar index could take correction towards 94.80-94.50, else any dip towards 95.20-95.30 could witnessed bounce back for the upside target 95.80-96.00.

EUR drop slightly

EUR fell slightly on Thursday, as foreign exchange traders parsed the minutes from recent meetings by the Federal Reserve and the European Central Bank for signals of further divergence between the top two central banks in the world.

EURINR had a range bound trade yesterday and settled at 75.6475, down 0.14%. On the above EOD chart pair is trading on verge of rising channel and a break below the lower trend line could point for the downside target of 74.80-74.50, but pair would need to trade below 75.50 in order to test 75.00-74.80.

Pound witnessed an impressive gain on Thursday

The pound extended early gains on Thursday after data showing that U.K. retail sales jumped in April, despite a steep drop in clothing sales which may have been due to unseasonable weather.

GBP-INR has made impressive bullish move for second consecutive day and after witnessed a gap up opening at 97.88 tested 98.7575 levels. A long bullish candle stick with break out of near term resistance 98.30 is indicating for momentum upside move in GBPINR. 

Hence, any dip towards 98.20-98.30 is expected to give buy opportunity for the target 98.60-99.00.

Japanese Yen remained neutral ahead of G7 meeting 

Yen traded little changed Thursday on safe-haven bets amid strong dollar after Federal reserve April monetary policy meeting minutes hinted at an interest rate hike in June.

Buy strategy given around 61.20-61.20 was initiated and after hitting a high of 61.48, JPYINR settled at 61.4450 levels. Sustain trade above the crucial support of 60.90 is creating probability for further upside move. 

  Further, JPYINR would need to trade below 60.90 in order to test 60.70-60.50 and below.

 Major Economic Data & Events Schedule today

Time	Currency	Economic Indicators	Forecast	Previous	Possible Impact
Day 1	ALL	G7 Meetings	-	-	-
11:30am	EUR	German PPI m/m	0.20%	0.00%	Positive
1:30pm	EUR	Current Account	19.6B	19.0B	Positive
3:30pm	GBP	CBI Industrial Order Expectations	-13	-11	Negative
6:30pm	USD	FOMC Member Tarullo Speaks	-	-	-
7:30pm	USD	Existing Home Sales	5.40M	5.33M	Positive

More will update soon!!