USDINR Slumps to Three Month Lows On Recovery Hopes

USDINR slumps in the early American trading session as the risk appetite spreads across the board. Hopes of a coronavirus vaccine after promising results in early-stage human trials from a vaccine from Pfizer and BioNTech boosted investors appetite for risk. Above that, strong economic data from the USA which point to a fast recovery of the biggest economy in the world also shift investors attention away from safe-haven assets such as the USD.

The U.S. Nonfarm Payrolls came in at 4800K, beating the market expectations of around 3000K in June. The 4.8 million new additions were the most jobs to be created in a month since the records began in 1939. The Unemployment Rate came at 11.1%, beating the analysts’ consensus of 12.3%. The Average Hourly Earnings came in at 5% below the expectations of 5.3%.

The Initial Jobless Claims came in at 1427K above the estimates of 1355K in the week of June 26. The Continuing claims rose to 19.3 million in the week ended June 20.
Reserve Bank of India (RBI) cut the interest rate by 40 basis points to 4% in an emergency move on May, in an attempt to offset the coronavirus impact on the economy.

Strong performance from Indian stocks also helped the Indian Rupee to gain against the greenback.
On the bank of various restrictions in India, the IMF now expects India’s GDP to contract 4.5% in the fiscal year ending March 2021, compared with the previous estimate of 1.9% growth. The downgrade in the expectations is due to the extensive period of a strict lockdown in India.

USDINR Daily Technical Analysis

USDINR is 1.14% lower at 74.397, making fresh three-month lows and breaking below the 100-day SMA for the first time since January. If the pair settles today below the 100-day, SMA sellers would be in control at least for the short term, and a pullback down to 73.50 looks possible.  

On the downside, initial support for the USDINR stands at 74.358 today’s low. Next support might provide the low from March 20 trading session at 73.726. A break below 73.726 might open the way for a move down to 73.444 the low from March 13.

On the flip side, first resistance for USDINR pair stands at 74.840 the 100-day moving average while today’s top at 75.264 will provide the next resistance. Next target to the upside will be the high from June 25 at 75.526. 

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USDINR Daily Chart

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