USDINR trades 0.44% higher at 71.068 making fresh three week highs after the Moody’s Investors Service changed its outlook on India’s ratings to “negative” from “stable”. Indian Rupee is under selling presure as traders worried that Indian government will fail to meet it’s budget targets after the surprise corporate tax cut in September. On the other hand Indian stocks and Nifty 50 are approaching all-time highs.
RBI in it’s latest policy meeting cut its interest rate for the Indian Rupee, by 25 bps, to 5.15% as widely expected by markets; that was the fifth cut so far this year for a total of 135 bps in an attempt to boost the countries struggling growth. Reserve Bank of India also reduced its growth rate projections for the year to 6.1% from 6.9%. Analysts expect the RBI to cut interest rates again in it’s December meeting that might put further pressure on Ruppee.
USDINR is under selling pressure since Indian government announced a cut to corporate tax rates for domestic companies to 22%. Investors await the FOMC meeting next week with expectations pointing to a 25 basis point cut.
USDINR Technical Analysis
On the technical analysis side, the short term momentum is bullish now as the pair trades above all major daily moving averages.
On the upside, first resistance stands at 71.202 today’s high, while a break above will open the way for a move up to 71.55 the high from October 16th, a convincing close above will attract more buyers in the market and will open the way for a move up to yearly highs at 72.428. For those looking to buy the pair, an entry point can be when the pair breaks above the daily top at 71.202 targeting the 72 mark.
On the downside, first support stands at 70.749 today’s low, while next barrier is at 70.443 the 100-day moving average; a break below will open the way for a move down to 200-day moving average at 70.164.