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USD/INR – Weekly Outlook for August 9 2019

USDINR Forecast & Technical Analysis

Introduction

This week the Indian Rupee shows general weakness paired against the USD, following favorable US news.   

Below, we’ll be analyzing critical price patterns driving the exchange rate on Binomo platforms as well as macro-economic events.

India’s Fundamentals 

India FX Reserves (USD)

International reserve of countries (made up of foreign currency assets, gold, unique drawing rights holdings and reserve position in the IMF, are applied to reconcile the balance of payments deficiencies between nations. The reserves also include foreign currencies, other assets named in foreign currencies, and some fixed amount of SDRs.

The foreign exchange reserve of a country can be used to intercede in the forex market to decide on the exchange rate. It serves as a valuable precaution for nations exposed to financial crises.

When the reading is higher than expected, it signals a positive/bullish sentiment for the INR, whereas a lower than expected reading means a negative/bearish trend for the INR.

Following the latest data on August 02, actual reading was pegged at 429.65B while the previous data was 430.38B, showing bearish sentiment for the INR.

India Interest Rate Decision

The Policy rates of any country are the most crucial rates and indicators within a country’s monetary policy. The monetary policy of a country is any action taken by the monetary authority of the country, its central bank or government, to achieve some targeted national economic goals.

It is determined by the correlation between interest rates by which money can be borrowed and the cumulative supply of money. Any shift in these policies has a direct impression on economic growth, inflation, unemployment, and exchange rates.

When the reading is higher than expected, it signals a positive/bullish sentiment for the INR, whereas a lower than expected reading means a negative/bearish trend for the Indian Rupee.

Following the latest data released, actual and forecasted reading is 5.75%, whereas previous data stood at 6.00%, which is bearish for the INR.

United States Fundamentals 

Crude Oil Inventories

The weekly differences in the amount of commercial crude oil barrels held by the U.S are evaluated by EIA ( Energy Information Administration ) firms. The strength of inventories affects the price of petroleum products, which can indirectly influence inflation.

A higher than expected rise in crude inventories implies smaller demand and is negative for oil prices. In the same way, a less than expected decline in inventories shows a bearish sentiment for the currency.

However, a smaller than expected rise in crude inventories implies higher demand, and this is positive for oil prices. A more than expected decline in inventories also indicates a bullish sentiment for crude prices.

Latest data shows actual reading at -8.496M, forecast at -2.588M, and the previous reading at -10.835M. These indicators point to a bullish sentiment for the USD.

USDINR Technical Analysis

USDINR: Monthly Chart

USDINR Outlook - Monthly Chart  - August 9 2019

Following a transition into a range-bound market from an earlier price plunge on November ’18, the USD to INR exchange rate bounced off the bullish support of 68.132 for a price increase of about 3.5% from the pin bar candlestick pattern.

USDINR: Weekly Chart

USDINR Outlook - Weekly Chart  - August 9 2019

On March 18 ’19, the support level at 68.346 prevents further decline of the USDINR, and result in a recoil of the trend to a bullish swing that increased by about 4.4% at press time.

USDINR Daily Chart

USDINR Outlook - Daily Chart  - August 9 2019

A breakdown of bullish accumulation on June 18 ’19 started signaled the bearish trend that lasts 1.95% before the bulls increased their buying power revealed as a regular bullish divergence on July 12 ’19.

The breakout of significant resistance (69.069) set the USD to INR into the overbought territory.

USDINR 4HR Chart

A closer zoom from the 4hour time frame reveals a rejection of bearish accumulation resistance on July 30 ’19 04:00 and setting support at 68.556. As the bullish trend advanced into the overbought area, further bullish support levels were established for re-entry points.

Conclusion and Projection

A formation of regular bearish divergence at press time shows a slowing of the bullish trend and a probable bearish reversal. We should look out for a price breakout above the bearish divergence resistance 0f 71.474 for a continuation of the bullish trend. Meanwhile, a bearish swing buildup is in view, as shown below.



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