Rupee extends gain, USDJPY lower

Friday,   21-Jul-2017   12:23 PM (IST)

The Indian rupee moves up to 64.31/32 levels in the afternoon trade as the greenback weakened against the euro after Chief Mario Draghi said the European Central Bank may discuss changes to its bond-buying programme later this year. However, greenback demand from state-run banks at lower dollar/rupee levels are expected to cap gains in the rupee. Traders will keep an eye out for intervention from central bank in case of excess volatility. As per the technical indicators range for the USDINR pair for the remaining part of the day may be 64.20-64.55 levels. Rupee has an immediate support at 64.37 levels. A breach of the same may see rupee at 64.45 followed by 64.51 and 64.58 levels. On the positive side rupee is likely to face resistance at 64.30 levels and if it is able to break the same then it may gain up to 64.22 levels followed by 64.14 and 64.05 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 4.58%, 4.60% and 4.61% respectively.

The USD/JPY pair continued with its struggled to gain any fresh traction and remained capped below the 112.00 handle. With markets looking past dovish BOJ monetary policy decision, a fresh wave of greenback selling pressure has been one of the key factors weighing on the major on the last trading day of the week. In fact, the key US Dollar Index has now slipped below the 94.00 handle and dragged the pair to session lows near the 111.70 region. Meanwhile, the prevalent risk-off environment, as depicted by weaker trading sentiment around global equity markets was also seen lending support to the Japanese Yen's safe-haven appeal and further collaborated to the pair's fall back closer to three-week lows touched in the previous session. From a technical perspective, the pair has been finding some buying interest near mid-111.00s and hence, it would be prudent to wait for a sustained break below the mentioned support before positioning for any further near-term depreciating move. Today's US economic docket lacks any major market moving economic releases and hence, broader market risk sentiment and the USD price dynamics would remain key determinants of the pair's movement through Friday's trading session.