USDINR trades 0.18% higher at 71.514 making fresh monthly highs in a leg higher that started the previous week after the Moody’s Rating Agency downgraded its outlook on India’s ratings to “negative” from “stable”. Indian Rupee felt the selling pressure as traders worried that the Indian government would fail to meet it’s budget targets after the surprise corporate tax cut back in September. On the other hand Indian stocks and Nifty are approaching all-time highs.
Reserve Bank of India 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 basis points in an attempt to boost Indias 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 the Indian government announced a cut to corporate tax rates for domestic companies to 22%.
USDINR Resistance and Support Levels
On the technical analysis side, the short term momentum is bullish now as the pair trades above all major daily moving averages. USDINR has breached the descending triangle to the upside, and a move up to 71.80 can’t be ruled out.
On the upside, first resistance stands at 71.566 today’s high, while a break above will open the way for a move up to 71.80 the high from September 17th, 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 71.566 targeting the 72 mark.
On the downside, first support stands at 71.304 today’s low, while next barrier is at 71.003 the 50-day moving average; a break below will open the way for a move down to 100-day moving average at 70.485.