The US dollar halted a three-session losing streak against the Indian rupee on Wednesday, with the USDINR going up by 0.1 percent at press time. The pair retested 84.00, recovering strongly from near three-week lows it dipped into in Tuesday’s session. The rupee cracked as a result of a high importer demand for the dollar and the scheduled release of FOMC meeting minutes on Wednesday.
A retest of the psychological round figure mark of 84.00 is significant for the dollar, but USDINR is will likely struggle to sustain the upside momentum in view of Federal Reserve Chairman Jerome Powell’s speech on Friday. That said, the absence of high-impact Indian macroeconomic data on Wednesday predisposes the rupee to intraday trading pressure as the FOMC meeting minutes weigh in. However, Powell’s speech, largely expected to be dovish, is expected to boost foreign capital inflows into Indian equities market, and that could see investors tame their dollar appetite in the intervening period.
USDINR momentum on the 4-hour chart points to a likely continuation of the upside trajectory. The pair is well above the middle Bollinger Band, with three candlesticks having cleared that barrier. However, gains have been limited since intersection with the 84.00 psychological mark, and that could set it up as a resistance level. Meanwhile, the Stochastic Oscillator %K is above %D, with the reading at 98 to add support to the strong bullish control.
On the chart below, USDINR looks set to extend gains if it stays above the pivot point at 83.95. Look for the first resistance at 84.00, but extended control by the buyers could break above that level and move to the second resistance at 84.05. Alternatively, the sellers could take control if the pair moves below 83.95. In that case, the first support could come at 83.90. However, further control by the sellers could strengthen the downside momentum to break below that mark, invalidate the upside narrative and potentially test 83.85.
This post was last modified on Aug 21, 2024, 10:45 BST 10:45