USDINR Stalls at Monthly Lows Ahead of FOMC Decision

Summary:
• USDINR trades 0.06% higher at 70.814 reversing earlier losses from monthly lows. The pair as pf writing halts the correction from December highs (71.74)

USDINR trades 0.06% higher at 70.814 reversing earlier losses from monthly lows.  The pair as pf writing halts the correction from December highs (71.74) mainly due to US dollar weakness and an unexpected move from Reserve Bank of India. In its December 5^th policy meeting RBI left interest rates unchanged at 5.15% and the reverse repo rate also unchanged at 4.90%. The growth outlook revised downwards from 6.1% in the October policy to 5%, and 4.9% – 5.5% in H2.

RBI has cut rates five times so far this year for a total of 135 basis points in an attempt to boost Indias struggling growth.

Moody’s Rating Agency has downgraded its outlook on India’s ratings to “negative” from “stable” two weeks ago.

Today’s focus is on the US CPI at 13:30GMT and the FOMC decision and press conference at 19:00 that will add to the pair’s volatility.

Bullish Outlook for Indian Rupee

On the technical side, the short term outlook is bearish now as the pair trades below all major daily moving averages and have hit fresh monthly lows earlier today.

Looking south, immediate support for the pair stands at 70.704 today’s low, while the next level that might provide support is at 70.537 the low from November 6^th. A convincing break below might open the way for a move down to 70.19 the low from September 27^th.

On the other side, immediate resistance for USDINR stands at 70.894 today’s high, while the next hurdle will be met at 71.059 the 100-day moving average. In case that the pair moves above that level the next resistance stands at 71.53 the high from December 5^th.