The US dollar and the Indian rupee were in a stalemate on Wednesday, with the USDINR pair trading flat at 83.68 at the time of writing. The dollar has been the stronger of the two currencies in July, much as its ascent has been weighed down by prospects of an interest rate cut in September.
Meanwhile, declining global crude oil prices have eased the pressure on rupee, as India is the world’s third-largest importer of the dollar-denominated commodity. USDINR is up by 0.4 percent in July, and the pair also hit all-time highs of 83.74 on Tuesday, signaling an underlying bullish control.
On the 4-hour chart, the price is currently above the Volume Weighted Moving Average (VWMA) indicator, signaling likely continuation of the upside. In addition, the Relative Strength Index (RSI) indicator is at 57, supporting control by the buyers. That said, the 83.70 mark is a key resistance level for the USDINR pair, and a move above that mark could strengthen the momentum to potentially retest the all-time highs.
The price is also above the signal line on the Bollinger Band indicator, and attempted breaches below that mark have been rejected. Also, attempted breaches of the upper band have been rejected-showing a near-equilibrium between the buyers and the sellers. To support this narrative, the MACD indicator has just intersected with the signal line.
Therefore, if this continues, we are likely to see the USDINR pair range-bound in Wednesday’s session. That said, the Energy Information Administration (EIA) will release its crude oil inventory figures later in the day. The data could have implications on oil prices and in turn affect sentiment around the rupee’s strength.
The momentum on USDINR signals control by the buyers above the 83.65 pivot mark. The pair will likely encounter the first resistance at 83.70, but extended bullish control could breach that level and potentially test 83.75. Alternatively, a move below 83.65 will favour the sellers to take control. In that case, the first support could come at 83.60. If they extend their control, they could build the momentum to breach the support and potentially send the pair to 83.55.
This post was last modified on Jul 24, 2024, 11:11 BST 11:11