Expert View: Rupee outlook on Friday

Overseas currency market saw hectic activity with two major central bank meetings and expectations of completion of Greek deal before EU ministers' meet. On central bank front, ECB kept rates unchanged at 1%, maintained its stance that it could not participate in sharing Greek bond losses as it was against the official policy to monetize debt, but added that the it could share profits on bond values which could serve to be of some help. ECB said that it saw some signs of stabilization emerging in the euro area though there remained a great deal of uncertainty about the path the economic growth would take in the future and said that the CPI was likely to above 2% for months then fall.

It also eased the collateral rules as it approved proposals from seven national central banks, including those of Spain, Italy and Portugal, to temporarily accept additional credit claims as collateral, which should clear way for greater access for ECB LTRO operation on Feb 29.

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Bank of England maintained its key rate at 0.5% and expanded its asset purchase program to 325 billion pounds by an additional 50 billion pounds. BoE's move was in line with market expectations and GBPUSD rallied briefly as the increase in QE was in line with market consensus.

Into US session, reports that Greek government and other coalition members had finally agreed to all demands by the troika led to brief rally in all majors against the US dollar. But this rally was slightly tempered following reports that EZ finance ministers had put off the decision to allow new bailout for Greece at their meet, seeking fresh demands. EU seeks following three from Greece:1) Its parliament approve austerity measures agreed by the government and other political parties, 2)Demonstrate additional spending cuts of 325 million euros for 2012 and 3) a written pledge by the coalition members for backing the austerity measures.

Market Outlook:

Spot USDINR has opened at 49.56 from 49.50 and was trading at 49.68. USDINR could trade in 49.35-49.80 range.

Despite a marginally firm start in local equities, USDINR remained well bid tracking US dollar gains against other higher yielding currencies. There remains an element of caution in overseas currency markets over the Greek deal, with the details not quite clear as yet. Also with EU ministers fresh demands Thursday for approving next bailout package for Greece has only added a bit more to the uncertainty. Among few new measures demanded by EU of Greece include that the parliament ratify the agreement and the coalition members submit in writting their explicit backing to implementing such measures.

On domestic front, data on industrial growth for Dec is due. Dec IIP is estimated at +3.0% from +5.90% in previous month.

On price charts, USDINR for the time being seems to have held above the 200-day EMA near 48.80 and has reboundedand with 100-EMA near 50.20 in picture as the next target, over the coming sessions.

Technical Trades Outlook:

USDINR: Support at 49.35,49.20 and 49.00 Resistance at 49.80, 50.00, 50.22.

Prices has witnessed buying interest at lower levels of 49.20 yesterday and suggest bullish trend for the short term with the price objective of 49.98, 50.20 levels.

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EURINR: Resistance seen near 66.00, 66.25, 66.50 and support near 65.50, 65.23, 65.05

EURINR has tested 200-Day EMA of 65.97 levels on Thursday. For the day corrective dips is likely to see towards 65.50 levels and follow its gains. A close above 66 can attract more gains towards 66.50 levels.

GBPINR: Support at 78.25 77.2, 76.7 Resistance at 78.9, 79.65.

JPYINR: Support at 63.7, 63.2, 63 Resistance at 64.5, 65.5, 65.9.

EURUSD: Resistance at 1.3320, 1.3380, 1.3440 and Support at 1.3240, 1.3200, 1.3133. EURUSD reached highest level of 1.3322, since Dec 12 and held below the 100-Day EMA of 1.3322 level and the market seems to hold tentatively below level.

Overall trend remains firm but market has to clear 1.3322 to attract additional gains. Any decline could be limited to 1.3240 level.