Sell EURINR; target of 81.35: ICICI Direct

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ICICI Direct's currency report on EURINR
US dollar continued its rally amid risk aversion in global markets and surge in US treasury yields. Yields extended gains after non-farm payrolls data showed economy added 428K jobs in April above the market expectations for 400K. However, further upside was capped as average hourly earnings rose just 0.3% below estimate of 0.4% gain. Rupee future maturing on May 27 depreciated by 0.75% amid strong dollar and risk aversion in the global markets. Further, rupee slipped on surge in crude oil prices. The rupee is expected to depreciate today amid firm dollar and pessimistic global market sentiments. Market sentiments were hurt as investors are concerned over surging inflation, monetary policy tightening across major countries in the globe, economic slowdown and escalating geopolitical tensions. Moreover, market participants fear that rising crude oil prices will hurt India’s trade and current account. US$INR (May) is expected to trade in a range of 76.80-77.25.

The Euro appreciated marginally by 0.08% on hawkish comments from ECB official. French central bank chief Francois Villeroy de Galhau said central bank should raise its deposit rate back into positive territory this year. However, sharp upside was capped on strong dollar and disappointing economic data from Germany. Industrial production declined by 3.9% in March 2022 compared to 0.1% rise in preceding month. The Euro is expected to trade with negative bias amid firm dollar and weak global market sentiments. Further, euro may slip as series of disappointing economic data from euro area sparked the concern over economic health of the region. Furthermore, single currency may weaken further on divergence in monetary policy. EURINR (May) is expected to trade in a range of 81.35-81.80.

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