- Summary:
- USDINR looks set to trade within narrow margins as the markets wait for US and Indian consumer inflation data for July.
USDINR traded flat on Monday, at 83.93 at the time of writing. Speculation is rife that the Reserve Bank of India (RBI) could be selling the US dollar to keep the rupee stable after a string of losses against the greenback in the last two weeks. India’s Consumer Price Index (CPI) inflation data will be out later in the day, and will provide perspective into the RBI’s likely extend of intervention into the forex market in the coming days.
However, the highlight of the week will be the US CPI data set for release on Wednesday. Analysts see it as the potential determinant of whether the September interest rate cut will by 25 or 50 basis points. However, the Producer Price Index (PPI) reading scheduled for Tuesday will also weigh in on the Fed’s decision making.
Momentum indicators
The indicators on USDINR 2-hour chart suggest that the momentum on the pair ranges from neutral to bullish. The current exchange rate is marginally above the middle Bollinger Band, which corresponds to 83.93 mark. Therefore, the pair may need to stay above that mark to maintain the upside. Meanwhile, the RSI is at 51, signifying that the buyers currently have an edge in the market.
Support and resistance levels
On the 30-minute chart, USDINR looks likely to continue with the upside if the action stays above the pivot point at 83.93. With the buyers in control, we could see the first resistance encountered at 83.96. However, extended control would enable them to break above that mark and potentially build the momentum to test 84.00. Conversely, the sellers could take control if USDINR slips below 83.93. In that case, look for the first support at 83.90. However, extended control by the sellers upon reaching that mark could breach the support and invalidate the upside narrative. Furthermore, it could result in a stronger downward momentum to test 83.87.
