- Summary:
- USDINR rose up marginally on Monday, but the week could present a steep mountain as attention shifts to Fed interest rate decision days away.
USDINR inched up on Monday, as the US dollar gained ground following reducing bets of aggressive interest rate cuts by the Fed. The pair was at 83.94 at the time of writing, representing a gain of 0.1 percent on the daily chart. The absence of high-impact data from both India and the United States on Monday means that the pair will likely trade within narrow margins of the current price.
Two FOMC members, San Francisco’s Mary Daly and Chicago’s Austan Goolsbee stated on Sunday that the recent US economic data clear the path for Fed to lower interest rates. Fed Chairman Jerome Powell will speak on Friday, and his speech will provide perspective into the likely extent of interest slash in September. That will put a lid on gains by the dollar across the board. The dollar index dropped to eight-month lows of 102.00, underlining the mounting pressure on the greenback against other major currencies.
Momentum indicators
The momentum on USDINR remains weak, with the pair below the Volume Weighted Moving Average (VWMA) on the 4-hour chart. A return above the mark, at 83.92 could provide the upside momentum to sustain gains to the upside. Meanwhile, the Relative Strength Index (RSI) is 51, adding support to the bullish momentum.
Support and resistance levels
On the 30-minute chart, USDINR will likely continue to the downside if resistance persists at the pivot point, currently around 83.90. With the sellers in control, it could lead to the establishment of the first support at 83.86. However, that could go even lower if they extend their control, in which case they could breach that level and push the pair to test 83.81. On the other hand, a move above 83.90 will favour the buyers to take control. In that case, we could see the first barrier at 83.95. However, extended control by the buyers could build the momentum to break above that mark and invalidate the downside narrative. Furthermore, it could lead to more gains to test 84.00.
