Weekly Outlook: FED Policy Meeting And Vaccine News In Focus

Weekly Outlook: FED Policy Meeting And Vaccine News In Focus

14 Mar 2021 12:01 PM

Weekly Outlook 15th March to 19th  March, 2021

USDINR: It is a relatively quiet week for Rupee on the economic calendar. The week starts with Wholesale inflation data and Trade balance, with the inflation expected to increase to 3.20% and trade balance is expected to decrease. On the other hand, it’s a busy week for Dollar on the economic calendar. NY Empire State manufacturing numbers start the week, followed by February retail sales and industrial production figures due out on Tuesday. Retail sales figures will be the key area of focus as the US economy is dominantly consumption based. Weekly jobless claim and Philly FED Manufacturing PMI numbers are due out in the 2nd half of the week and will garner plenty interest. The main event for the week will be the FED monetary policy decision on Wednesday with the FOMC projections expected to be the key driver.

USDINR tech: USDINR witnessed a lot of volatility in the past week. It started the week at 73.15, went as low as 72.615 to finally end at 72.78. The immediate support lies at 72.50, a level last seen in March 2020. The pair is expected to appreciate till 72.50 and shoot up from there. The immediate resistance lies at 73.15-20 region followed by 73.45. If it sustains above 73.45, the next target would be 73.75-80. Importers are advised to target 72.50-60 for hedging decisions. Exporters are advised to target 73.15-20 for completely unhedged positions and 73.45 if they are comfortably hedged.

EURUSD – It’s a busy week for Euro on the economic calendar. ZEW Economic Sentiment figures for Germany and the Eurozone are due out on Tuesday and the pair is expected to be sensitive to the numbers. Finalized inflation figures for the Eurozone are due out on Wednesday and barring any upward revisions, the numbers are expected to have a muted impact on the pair. Eurozone trade data, wage growth figures and German wholesale inflation numbers are also due out but, are not expected to influence. Fresh coronavirus cases and renewed lockdown measures could test the sentiment for Euro. US Treasury yields will remain the main market driver, with another spike in the yields pulling the pair further down. Vaccine rollouts will also be key with the EU lagging in the vaccination drive as it is heavily reliant on AstraZeneca's vaccines.

EURUSD Tech: EURUSD is trading below its 33-day, 55-day and 89-day SMA. The short-term average intersected the long-term average from above, indicating that the pair is expected to fall. We might see consolidation in the 1.17-19 region.

GBPUSD – It is a quiet week for Pound on the economic calendar. Although, the BoE will be in action on Thursday. Market participants will be focusing on BoE’s view on inflation and the economic outlook. The bank's remarks on the current state of the economy, the impact of vaccines and the reopening will be the key driver for the week. An optimistic view may boost the pair whereas a more cautious and uncertain view could push it lower. Another surge in the US Treasury yields could weigh on the pair and will be in focus throughout the week.

GBPUSD Tech: GBP/USD has made significant attempts at the 1.40 level, making it a major resistance. We can see divergence, indicating that the pair may see some correction towards 1.3750 level before continuing on its upward trend towards 1.40, followed by 1.4235.

USDJPY – It is a relatively busy week for Yen on the economic calendar. Industrial production figures for January are due out, followed by trade data for February in the 1st half of the week. In the 2nd half, February inflation figures will be in focus. The BoJ will be in action on Friday although, the focus will be on the Federal Reserve meeting on Tuesday and Wednesday. The first Projection Materials for the US will be issued and any improvement in the GDP and the unemployment estimates, will confirm the positive US economic outlook and boost Yen.

USDJPY Tech: USDJPY is expected to rise towards 110 level before any reversal can be expected. The immediate resistance lies at 110, breaking which, we may see levels like 112. In case of a reversal, the important support lies at 108.30. Technical indicators are also pointing towards a bullish JPY, with the RSI making a failed attempt towards 70.