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USDINR – Weekly Outlook & Analysis for 10th April 2022

Introduction

News about the Feds meeting will keep traders off the online forex platform until the chairman of the FOMC finishes addressing the market participants on the interest rate hike and their projection on inflation. The USDINR has been bullish for some days and the trend may likely continue.

India’s Fundamentals 

The Indian households across the nation experienced about a 45% drop in the level of their income when the lockdown was introduced during the coronavirus surge. The ministry reported that the Omicron virus effect on the economy is much weaker than in the previous two waves. 

The Indian rupee and the economy are recovering from the economic crisis as the Indian economy is above the 9% projection for the year while the MPC inflation forecast is 5.3% for the year 2022 and its tolerance band is within 2%-6%.

The CPI (Consumer Price Index) came at its highest in the past seven months when the data jumped to 6.01% as of January 2022. The DEA views that global inflation and energy prices are going to influence the Indian rate of inflation and GDP will decline by 3.0%-3.5% proposed in the 2022 budget.

US Fundamentals

US PURCHASING MANAGEMENT INDEX

Institute for Supply Management releases the Non- manufacturing ISM report the third business day into the new month. Traders and investors care about the report because the purchasing managers have better insight into the company’s view on the economy. 

If the figures are above 50.0, it shows expansion in the industry but a lower figure shows contraction in the system. 

The report is measured based on the level of a diffusion index that was carried out among purchasing managers excluding the manufacturing industry. Over 300 purchasing managers were asked to rate the economic development in terms of price, inventories, employment, production, and new orders among others. 

The forecast is 58.6 while the previous data was 56.5.

USDINR Technical Analysis

Monthly Chart Projection

UDSINR monthly chart - 10th April 2022

 

Monthly Resistance Levels: 77.50, 78.00

Monthly Support Levels: 72.33, 72.00, 73.00. 

On the monthly chart, you can that the price of USDINR failed to close above the resistance zone of 78.00 which led to the rejection of Bulls run. The USDINR pair faced another rejection at the close of March like it experienced on 01 April 2020. 

The price was rejected by Indian brokers who are shorting the pair from the resistance zones. The Indian rupee showed strength as the previous month closed in a pin bar candlestick pattern. This shows that the market sentiment is bearish on the pair. 

Weekly Chart

UDSINR weekly chart - 10th April 2022

Weekly Resistance Levels: 76.50, 77.20.

Weekly Support Levels: 73.76, 72.98, 75.00

The USDINR pair has been in an upward channel as the price respects the lower and upper channel zones. The weekly candle of 7 March 2022 respected the resistance zones by not closing outside the channel but saw the rejection of the price by closing in a Doji. However, we have seen that the Indian rupee gained momentum from the zone and it is likely going to push the price down towards the lower zone of the channel.

Online brokers need to understand that as the price is in a correcting phase of the market from the forex platform, the psychological zone for the pair to find support may hold from the 75.00 level. The sellers were able to push the Bulls back to the 75.30 level gaining about 2.43% against the US dollar before the buyers were able to push the price up.

The market will attract online brokers who are bearish if the week can close below the 75.55 level of the previous week’s support. This will take the price to lower zones of the market on the weekly chart.

Daily Projections: Breakout of Descending Triangle

UDSINR daily chart - 10th April 2022

Daily Resistance Levels:  75.99, 76.72, 76.60, 77.00.

Daily Support Levels: 75.25, 74.50.

The Indian rupee is in a downtrend for the past few days as the price was steadily dropping from the resistance zone of 77.00. The Indian rupee is breaking the lower support for the pair to continue its downward trend. A close below the support zone of 75.25 will take the price lower to another support zone.

A close of the daily candlestick shows indecision in the market on the daily chart, if the sellers are few in the market and cannot close below the zone, we may see the online brokers who are long on the USDINR will take the price up. A close above the 76.60 zones will reverse the bearish trend into a bullish run and the 77.00 resistance zone will be retested by the buyers.

Bullish Scenario:

A breakout above the resistance zone of 76.60 will give the online brokers an advantage for the price to become an uptrend and a close above the higher resistance mean trend continuation for the USDINR pair.

Bearish Scenario:

This week started with the Bears closing the day below the previous week’s support zone, if the momentum is strong the Indian rupee will attract more traders on the forex platform if they can sustain the rally below the zone.  

Conclusion and Projection

The forex platform will be bracing up for the FOMC meeting that will take place during the trading week. If the minutes of the meeting tend to be hawkish, the US dollar will be strong against the Indian rupee. 

The outcome of the meeting will be providing insight into the health of the economic activities and the financial condition that influenced their decision technically.



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