Weekly Outlook: Covid-19 & Economic Data In Focus

Weekly Outlook: Covid-19 & Economic Data In Focus

11 Apr 2021 10:53 AM

Weekly Outlook 12th April to 16th April 2021

USDINR:  It was a very volatile week for the pair. It was the worst week in 7 years where the rupee depreciated by 1.78%. This volatility came as there was a spike in corona virus cases in India and RBI decided to buy back government bonds worth one trillion rupee.  The week starts with CPI for March. Cumulative industrial production, industrial production and manufacturing output for February is also due on the same day. As we move ahead, WPI numbers for March is due. Import, export and trade balance numbers are due out in the second half of the week.  Currency market will remain closed in India on Tuesday 13th April for Gudi Padwa and Wednesday 14th April on account of Dr.Baba Saheb Ambedkar Jayanti holiday.It is a relatively quiet week for the dollar. It starts with Core CPI numbers for March. On Wednesday, crude oil inventories are due. Thursday is a busy day in the economic calendar where core retail sales for March, retail sales for March, initial jobless claims and Philadelphia Fed manufacturing index for April are due out. The week ends with building permits that was issued on the month of March.

USDINR Tech:  In the previous week USD/INR rallied significantly breaking above a one-year trend line (Green colour) which has offered plenty resistance since April 20’. The pair rallied INR 1.44 or 1.96% in just 3 days from 72.51 to 74.95. Naturally all momentum indicators have reached their extremes and a corrective pullback is bound to happen soon. The pair ended the week forming a spinning top indicating market indecision, and after a massive rally in mere 3 days it could also mean the market has found its peak. Currently there are 2 open gaps on the USDINR chart from 72.52 to 72.76 (Pink parallel lines) while another gap is from 73.43 to 73.51 (Yellow Parallel lines), such open gaps usually fill up in USD/INR. Exporters should cover their near term and long-term exposures at current levels, while importers should wait a few more days and can target levels below 73.50 to start hedging.

EURINR:  The pair rebounded from a low of 1.1702 seen in the week before. Euro gained momentum and touched a high of 1.1927 as better than expected economic data was released. Furthermore, the ECB said that it would start reducing its bond purchase during the summer. It is a relatively quiet week for Euro. The week starts with retail sales numbers for February. On Tuesday, German and Eurozone ZEW economic sentiment data is due out and will be the key area of focus as this will help determine the level of optimism in the economy. Moving ahead, industrial production data for February is due which is forecasted at -0.9%. On Thursday, German CPI numbers are due. Friday is a busy day in the economic calendar as CPI numbers for March and Eurozone trade balance are due. CPI is expected to be unchanged.

EURUSD Tech:  EUR/USD ended the week higher at 1.1896 compared to its open of 1.1759 in a very volatile week. However, the bears took control and formed a hanging man pattern, indicating that we may see a trend reversal in Euro and the pair may start the week lower. EUR/USD tested the 1.1920 level thrice during the week but failed to break it, making it an important resistance in the near-term followed by 1.1940 and 1.1985. Immediate support lies at 1.1860, followed by 1.1816 which also coincides with its 9-day SMA. If the pair manages to break that, we may again see the likes of 1.1800.

GBPUSD:  The Pound has been under selling pressure amid vaccine worries and despite U.S. currency weakness, throughout the week. The pair was pressurized by concerns about a possible link between the AstraZeneca vaccine and a rare blood clotting disorder. On economic calendar, we have GDP, which indicates the economy’s health. A number better than expected should be bullish for sterling. Manufacturing Production for the month of February is due out on the same day. A higher than forecasted reading will be positive for the currency. Prime Minister Boris Johnson announced that pubs, gyms and other places would reopen on April 12, which may provide some strength to the Pound.

GBPUSD Tech: GBP/USD opened the week on a positive note but, bears took control and formed lower lows throughout, ending the week 0.85% lower at 1.3708. RSI is trading above the oversold territory, indicating the bears may remain in control in the near-term. Immediate support lies at 1.3670 followed by 1.3655. Pound is expected to face some resistance at 1.3770 which coincides with its 14-day SMA, a support turned resistance. Followed by 1.3840 and 1.3920.

USDJPY:  The US currency has dropped significantly against the Japanese Yen during the week despite an upbeat U.S. data to reach down towards the 109 level. But the dollar advanced against the Yen on Friday as easing inflation fears bolstered the U.S. currency. There is no key data in economic calendar for yen this week. The U.S. Core CPI data is due out on Tuesday and is expected to increase, which may lead to an uptick in the US Treasury yields, adding further pressure on the pair. The focus will then shift to U.S Initial Jobless claims numbers due on Thursday. A decrease in the number of people filing for jobless claims may prove to bearish for the Yen.

USDJPY Tech: USD/JPY opened the week well above the 110 level but bears took control and dragged it as low as 108.98. The pair attempted to touch the 110 level but failed to meet any buyers at that level. With bulls taking control during the last trading day of the week, we may see a higher open next week. Immediate resistance lies at 109.95 followed by 110.11 which also coincides with its 9-day SMA. Support lies at 108.76, coinciding with the 33-day SMA which acted as a strong support at the start of 2021. If the pair breaks below 108.76, next support lies at 108.40 followed by 108.30.