USDINR Rebound Vulnerable Below 71.085

USDINR recovers early losses during Asian trading session and now trades 0.06% higher at 70.954. USDINR continue higher for the third consecutive session as the rebound from monthly lows continues. The rally in Indian Rupee against the U.S. dollar  from November 13 high stalled at 70.455.

Moody’s Investors Service, downgraded India’s economic growth forecast for the fiscal year 2019/2020 amid weak household consumption. Moody’s had downgraded its outlook on India’s ratings to “negative” from “stable” two weeks ago.

RBI Easing Cycle

The central bank of India in its December 5th policy meeting left benchmark rates unchanged at 5.15 per cent and the reverse repo rate also unchanged at 4.90%. India’s growth outlook revised downwards from 6.1% in the October meeting to 5%, and 4.9% – 5.5% in the second half. RBI has cut interest rates five times so far in 2019 reducing rates by 135 basis points in an attempt to boost India’s struggling growth.

RBI Governor Shaktikanta Das said that there is space for further monetary policy action to support economic growth but the timing needs to be optimized to maximize the impact in the real economy.

On the economic data front, the India Trade Deficit Government came in at $12.12B below expectations of $12.3B for November. The WPI Inflation came in at 0.58% below estimates of 0.74%.

Meanwhile, the Indian shares, hit fresh record highs, mirroring gains in their Asian and Wall Street counterparts. Investors now look forward to the US JOLTS job openings and the Industrial Production data.

Read our Best Trading Ideas for 2020.

USDINR Technical Outlook

On the technical analysis side, the short term outlook is neutral now as the pair trades below the 50-day and 100-day moving averages, but holds above the 200-day moving average.

On the upside, first resistance for USDINR stands at 70.995 today’s top. If the pair breaks above that level the next hurdle stands at 71.085 the 50-day moving average. Next target to the upside will be the 100-day moving average resistance at 71.134.

On the other side, first support for the pair stands at 70.816 today’s low. Solid support might provide the low from December 13 at 70.450. A credible break below the December low might pave the way for a move down to 70.21 the 200-day moving average.

For traders looking to go long in the pair, an entry point can be when the pair breaks above the 50-day moving average targeting the 72 mark.

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