- Summary:
- The USDINR pair reached an all-time high on Thursday, but the looming release of US PCE data has seen the bulls climb down as a precaution.
USDINR eased down on Friday as traders tamed their appetite for the dollar ahead of US Personal Consumption Expenditure (PCE) index data release. The trading pair hit all-time highs of 83.81 in the New York session on Thursday on account of better-than-expected US GDP data, but that rise was short-lived, as investors now expect PCE data to indicate that inflation rate cooled further in the United States in June. USDINR traded flat at 83.67 as of this writing, snapping a three-session winning streak, to set the stage for PCE-driven momentum.
On the 4-hour chart, USDINR signals a weakening momentum, with the price attempting to cross below the middle band of the Bollinger Bands indicator. Note that the price is trending downwards from an initial spike that momentarily crossed above the upper band. The intersection point is around 83.70, making that a potential pivot mark. Also, the RSI indicator is at 49.7, with the indicator line pointing downwards. This adds to the view of an impending takeover by the sellers, which will weigh down on the pair.
However, the rupee’s downside could be propelled by a rise in global oil prices in the wake of a decline in US oil inventories for the fourth successive week to signal strong demand.
Support and resistance levels
On the 4-hour chart, the momentum signals likely continuation of the downside if resistance persists at 83.69. With the sellers in control, USDINR could find the first support at 83.66. Furthermore, an extended bearish market could see a breach of that mark and the establishment of a second support at 83.61. Alternatively, a move above 83.69 will put the buyers in control. However, the resulting upside momentum will likely encounter the first resistance at 83.74. Furthermore, extended control by the sellers could breach that barrier, invalidate the downside narrative and potentially build the momentum to move the pair higher to test 83.80.
