USDINR inched up in Tuesday’s afternoon trading session as traders reacted to India’s July Wholesale Price Index (WPI) inflation figures. The trading pair was at 83.95 at the time of writing, with an intraday gain of 0.1 percent. Notably, the Indian rupee and the US dollar have been trading sideways for the most part in the last eight days, as interventions by the Reserve Bank of India (RBI) and reduced prospects of aggressive interest rate cuts by the Federal Reserve play out. This has seen the USDINR pair oscillate between 83.84 and 83.96 during that period. Therefore, a return to the psychological round figure level of 84.00 could potentially unlock the stalemate and inject fresh impetus into the market.
India’s WPI fell to 2.04 percent YoY in July, below the consensus forecast 2.39 percent. That was the second successive monthly decline in the index, exerting downward pressure on the rupee. Moving on, the highlight of the day will be the US Consumer Price Index (CPI) data release later on Wednesday, which will provide guidance on the estimated size of Fed rate cut in September.
The 4-hour chart shows that the downward momentum on the USDINR pair is stronger than the upside momentum. The pair trades below the VWMA, which is at 83.92 as of this writing. Meanwhile, the RSI reads 49, which is a neutral-to-bearish momentum.
On the chart below, USDINR looks set to head up above the 83.90 pivot level. With the buyers in control, the first resistance could come at 83.97. However, they could breach that mark and take the pair higher to test 84.02 if they extend their control. Conversely, a move below 83.90 will signal control by the bears. In that case, look for the first support at 83.84. However, if the sellers extend their control, the downward momentum could be strengthened further to break below the first support and invalidate the upside narrative. At that point, the downside could be extended to test 83.80.
This post was last modified on Oct 01, 2024, 10:28 BST 10:28