The US dollar’s resurgence continued against the Indian rupee on Monday, with the USDINR pair going up by 0.05 percent to trade at 83.72 at the time of writing. The greenback remains under pressure after PCE data released on Friday showed a softer inflation rate. However, high demand for the dollar by Indian importers eases the pressure from the rupee and will likely continue on that trajectory as the month comes to a close.
US Personal Consumption Expenditure declined year-over-year in June to 2.5 percent from May’s 2.6 percent, aligning with analysts’ forecast figure. However, the Core PCE index (excluding food and energy prices) remained unchanged at 2.6 percent in June, exceeding the consensus forecast figure by 0.1 percent. These figures signal a downward inflation trajectory, much as an interest rate cut by the Federal Reserve in August looks unlikely.
On the 4-hour USDINR chart, the 20-period SMA is well above the 50-SMA, signaling that the buyers have a hold of the market. Also, the price is above the 20-MA line, supporting a likely continuation of the upside. Furthermore, the Relative Strength Index is at 58, cementing the bullish narrative. However, the price candlesticks have crossed below the 20-SMA line a couple of times, signaling a possibility of the weakening of the upside momentum. That makes the 83.70 a critical pivot level for the pair.
The 30-minute chart shows that the USDINR pair will likely continue the upside above the 83.71 mark. That could propel gains to encounter the first resistance at 83.73. However, a break below that mark could strengthen the upward momentum to propel further gains to test 83.76. Alternatively, if the pair moves below 83.71, it will likely result in control by the sellers. In that case, the first support will likely be at 83.67. However, if the sellers break below that mark, it could strengthen the downward momentum to invalidate the upside narrative and potentially take the pair lower to test 83.65.
This post was last modified on Jul 29, 2024, 09:08 BST 09:08