The USD/INR price was in recovery mode on Monday morning as investors reflected on last week’s RBI interest rate decision and US non-farm payrolls data. It was trading at 79.31, which was about 1.50% above the lowest level this month.
The USD to INR exchange rate bounced back after the US published strong jobs numbers on Friday. The data revealed that the economy added over 528k jobs in July of this year, while the unemployment rate dropped from 3.6% to 3.5% in the same month. At the same time, the participation rate and wages continued rising.
As a result, analysts believe that the Fed will likely continue tightening in the coming months since inflation remains at an elevated level. In addition, the US will publish the latest consumer inflation data on Wednesday this week.
Analysts expect that prices pulled back slightly during the month, although it remained above the Fed’s target of 2.0%. In a statement during the weekend, Fed’s Mary Daly hinted that the bank will hike interest rates by 0.50% in its upcoming monetary policy meeting in September.
The USD/INR price also recovered as investors expect that the Reserve Bank of India (RBI) will not be as hawkish going forward. The bank hiked its repo rate by 50 basis points to 5.40%
The four-hour chart shows that the USD to rupee exchange rate declined sharply last week after the RBI decision. As it dropped, it formed a long-legged doji pattern and resumed a bullish trend. The pair remains slightly above the 25-day moving average while the MACD has moved slightly above the neutral point.
Therefore, the pair will likely continue rising as bulls target the important target of 80. This recovery will likely happen ahead or after the upcoming US inflation numbers that are scheduled for Wednesday. A drop below the support at 78.80 will invalidate the bullish view.
This post was last modified on Aug 08, 2022, 08:43 BST 08:43