USDINR is trading higher today after the Reserve Bank of India (RBI) slashed rates to help support the economy amid the coronavirus pandemic. As of this writing, the currency pair is up by 1.27%.
From 5.15%, the central bank slashed its repo rate by 4.40%. This is the first time that the RBI reduced interest rates this year after a series of rate cuts which ended in October of last year. Alongside this, the central bank also announced that it would inject $50 billion to the economy. The move follows after the Indian government put the country on a 21-day lockdown as coronavirus cases rise. India currently has 727 confirmed cases with 20 deaths.
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A couple of hours following the announcement, USDINR has risen from an intraday low of 74.21 to a high of 75.96. On the 1-hour time frame, it can be seen that the currency pair is testing resistance at the falling trend line (from connecting the highs of March 19, March 24, and March 26). If buyers are not able to sustain their momentum, USDINR could once again fall to trend line support at 74.60.
USDINR, 1-hour chart
On the other hand, a close above this resistance level could mean a potential rally to last week’s highs at 76.40. If resistance at that price does not hold, the next ceiling could be at 77.32 where USDINR peaked on March 19.