USDINR trades 0.22% lower at 71.364 as the correction from monthly highs continues. The pair hit two-month highs after the Moody’s Rating Agency downgraded its outlook on India’s credit rating to “negative” from “stable”. Indian Rupee was under strong selling pressure as traders worried that the Indian government would fail to meet it’s yearly budget targets after the surprise corporate tax cut. Indian stocks and Nifty hit earlier today all-time highs but as of writing the index has retreated but holds above the 12,000 mark.
Reserve Bank of India in it’s latest policy meeting cut its interest rate for the Indian Rupee, by 25 bps, to 5.15%; that was the fifth cut so far this year for a total of 135 basis points in an attempt to boost India’s economic growth. RBI also reduced its growth forecast for 2019 to 6.1% from 6.9%. Economist expects the Reserve Bank of India to cut interest rates again in it’s December meeting and that might put further pressure on Rupee.
Technically, USDINR short term momentum is positive despite the recent correction as the pair trades above all major daily moving averages. The pair jumped to 72 after it breached the descending triangle to the upside and started the correction after rising hopes that Indian government will come back with fresh stimulus to support the struggling economy.
First support for the pair stands at 71.376 today’s low, while next level to watch on the downside is 71.024 the 50-day moving average; in case the USDINR price break below will open the way for a move down to 100-day moving average at 70.776.
On the other hand, immediate resistance stands at 71.524 today’s high, while a credible break above will open the way for a move up to 71.86 the high from November 19th, 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.More content