Month: April 2022

• USD/INR is marching towards 76.40 as DXY strengthens on jumbo rate hike expectations.
• Shanghai’s reopening and supply concerns in Libya have pushed the oil prices higher.
• The political crisis in Libya has seized up the oil exports.

The USD/INR pair has been bounced modestly in its early trade on Monday from 76.26. The major is scaling higher after printing a low of 75.24 on April 5. Surging oil prices and DXY have brought a slump in the demand for the Indian rupee.

Oil prices are advancing firmly as China has prepared to eradicate lockdown restrictions in Shanghai and supply concerns renew. After an almost three-week lockdown due to the Covid-19 resurgence, Shanghai is re-allowing economic activities in its region. This has cheered the oil bulls as the reopening of the world’s largest oil importer will support the aggregate demand. On the supply front, Libya could not deliver oil from its biggest oil field and shut another field due to political protests as per Reuters. An expected rebound in the aggregate demand along with renewed supply concerns has infused fresh blood in the oil counter.

Meanwhile, the US dollar index (DXY) is hovering around 101.00 backed by higher expectations of a jumbo rate hike by the Federal Reserve (Fed) in May. Federal Open Market Committee (FOMC) member James Bullard in his speech on Monday has bolstered the odds of aggressive guidance by the Fed. The FOMC member advocates a reversion of interest rates to 3.5% and that too by the end of the year. This has underpinned the greenback against the Indian rupee.

USD/INR

OVERVIEW
Today last price	76.357
Today Daily Change	0.0694
Today Daily Change %	0.09
Today daily open	76.2876

TRENDS
Daily SMA20	76.0149
Daily SMA50	75.811
Daily SMA100	75.3584
Daily SMA200	74.8345

LEVELS
Previous Daily High	76.4137
Previous Daily Low	76.2185
Previous Weekly High	76.5975
Previous Weekly Low	75.7848
Previous Monthly High	77.1725
Previous Monthly Low	75.2242
Daily Fibonacci 38.2%	76.2931
Daily Fibonacci 61.8%	76.3392
Daily Pivot Point S1	76.1995
Daily Pivot Point S2	76.1114
Daily Pivot Point S3	76.0043
Daily Pivot Point R1	76.3948
Daily Pivot Point R2	76.5019
Daily Pivot Point R3	76.59

FX Strategists at UOB Group Quek Ser Leang and Lee Sue Ann noted EUR/USD could still drop further in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that EUR ‘could drift lower to 1.0780’. We added, ‘last week’s low near 1.0755 is unlikely to come into the picture’. Our view was not wrong as EUR dropped to 1.0768 before closing at 1.0780. While downward momentum has not improved by much, EUR could weaken further to 1.0755. For today, a sustained decline below this level is unlikely (next support is at 1.0725). Resistance is at 1.0800 followed by 1.0820.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (18 Apr, spot at 1.0805). As highlighted, risk for EUR is on the downside even though it may trade above the solid support at 1.0755 for a couple of days first. Looking ahead, a breach of 1.0755 would shift the focus to 1.0725 followed by 1.0700. Overall, only a break of 1.0845 (‘strong resistance’ level was at 1.0885 yesterday) would indicate that the downside risk has dissipated.”

• GBP/JPY has surpassed the resistance of 166.00 as the pound strengthens on higher CPI.
• Higher energy bills are widening Japan’s fiscal deficit.
• Japan’s National CPI is seen at 1.3% against the prior print of 0.9%.

The GBP/JPY pair is witnessing a bullish open test-drive session on Tuesday amid broader weakness in the Japanese yen. The pair is advancing firmly in Tuesday’s session and has overstepped the round level resistance of 166.00. Although the momentum oscillators have turned extremely overbought, the pound bulls have shown no signs of exhaustion yet.

The Japanese yen is displaying broader weakness in the Fx domain as the rising oil prices have started widening the fiscal deficit in Japan’s economy. Japan is a leading importer of oil and other necessary commodities. Therefore, a serious jump in the prices of fossil fuels is hurting the yen. This week, the release of Japan’s National Consumer Prices Index (CPI) will be a major trigger for the cross. The Statistics Bureau of Japan is expected to release the yearly CPI at 1.3%, higher than the prior print of 0.9%. Despite, higher inflation expectations, the Bank of Japan (BOJ) is likely to keep the policy rates unchanged as the growth rate of Japan has yet not reached its pre-pandemic levels.

Meanwhile, the pound bulls are dominating amid the rising odds of a fourth-rate hike by the Bank of England (BOE) in May. A higher UK inflation print at 7% is compelling for more interest rate hikes. This week, UK’s GfK Group Consumer Confidence will remain in focus. A preliminary estimate for the Consumer Confidence is -33 against the prior print of -31.

GBP/JPY

OVERVIEW
Today last price	166.3
Today Daily Change	0.85
Today Daily Change %	0.51
Today daily open	165.45

TRENDS
Daily SMA20	162.03
Daily SMA50	157.81
Daily SMA100	155.79
Daily SMA200	154.22

LEVELS
Previous Daily High	165.47
Previous Daily Low	164.64
Previous Weekly High	165.44
Previous Weekly Low	161.67
Previous Monthly High	164.64
Previous Monthly Low	150.99
Daily Fibonacci 38.2%	165.15
Daily Fibonacci 61.8%	164.96
Daily Pivot Point S1	164.9
Daily Pivot Point S2	164.36
Daily Pivot Point S3	164.08
Daily Pivot Point R1	165.73
Daily Pivot Point R2	166.01
Daily Pivot Point R3	166.55

• AUD/USD is meeting a firm support area following the RBA minutes. 
• Bears lurking near a presumed resistance area through 0.74 the figure. 

AUD/USD is meeting a dynamic trendline support line and the bulls are eyeing a 38.2% Fibonacci retracement and a higher 50% mean reversion towards 0.7420. 

AUD/USD daily chart

As illustrated, there is a heavily bearish cycle but there has been bid that could equate to a leg higher. 

AUD/USD H1 chart

For the price to continue correcting, we have immediate resistance that will need to be cleared, however, the W-formation would be expected to hamstring the price at this juncture.

According to the analysts at Goldman Sachs, the People’s Bank of China (PBOC) will refrain from cutting the one-year and five-year Loan Prime Rates (LPR) on Wednesday.

Key quotes

“The PBOC seems concerned about “spillover effects” as other countries raised interest rates. For example, capital outflow from China.”

“Also, the PBOC is concerned that cutting interest rates would not have much effect on an economy in which credit demand was weak and the outlook for inflation uncertain.”

On Friday, China’s central bank kept the rates on the medium-term lending facility (MLF) unchanged although slashed the Reserve Requirement Ratio (RRR) by 25 bps, effective as of April 25.