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USDINR Prints Red On Upbeat Indian Equities Markets Sentiment

USDINR dropped further down on Monday, losing 0.1 percent of its value to trade at 83.4 at the time of writing. The pair is on course to record the first consecutive session losses since May 20, underlining the rupee’s resurgence against the US dollar. The rupee’s strength has benefitted from the decline in global oil price gains in the last three sessions, as well as the upbeat investment momentum in the Indian securities markets.

Indian securities markets rose in June, with the Nifty 50 up by 4.5 percent this month. Similarly, the BSE Sensex Index has risen by 4.6 percent in the same timeframe. This has been underpinned by increased foreign capital inflows into the Indian economy after the recently held elections. Furthermore, domestic investors have an increased risk appetite, creating a spike in the uptake of assets. At the time of writing, the India Volatility Index (India VIX) was up by 6.6 percent on the daily chart. This is likely to continue attracting more investors into the market, with increased earning opportunities at play.

Oil prices had been on a steady ascending trajectory since June 5, but the last two sessions have been occasioned by a slowdown in the momentum. US crude oil inventories rose for the third consecutive week in the week ending June 12, impacting the demand-side view of the commodity. That said, the summer outlook for the commodity is bullish, and could provide tailwinds to USDINR, as India is the world’s third-largest importer of dollar-denominated crude oil.

Technical analysis

The momentum on USDINR currently favours the downside, and the downward momentum is likely to continue if resistance persists at 83.44. The first support will likely be at 83.40, and a break below that mark could strengthen the sellers to take the pair lower to test 82.36. On the other hand, the buyers break above 83.44 could strengthen the buyers to take control. That could build the momentum to head to 83.47, beyond which the downside narrative will be invalid, Furthermore, it could lead to further gains to test 83.50.