USDINR – Weekly Outlook & Analysis for 30th September 2022
Introduction
From the forex platform, we can see that the US dollar continues to get stronger and it is creating a new high on the trading platform. The Reserve bank of India has been selling dollars to manage the volatility in the market which is affecting the Indian currency
India’s Fundamentals
The Indian Forex reserves have shrunk and should the pool shrink closer to $500 billion in the nearest future it won’t be good for the economy. According to Barua, the HDFC Bank Chief Economist says that the central banks may need to find stabilize the depreciating Indian rupee.
He said that the currency has been weakened by 9.05% this year and that the central bank should intervene so that it does not obscure India’s fundamentals.
He suggested that the RBI should encourage non-resident Indians to deposit more funds as it was done in July when the RBI allowed banks to raise foreign currency deposited by non-residents at a higher cost also permitting foreign investors to buy shorter-term local debt as a means to encourage more inflow into the country foreign reserve.
US Fundamentals
US (CB) CONSUMER CONFIDENCE
The consumer confidence data is an important index for traders and investors as it shows the general view of consumers towards the economic condition of the country. A survey was carried out among some households and they are asked to rate the current economic condition in the country and also rate the future economic conditions which will factor in the present labor conditions, business activities, and overall economic condition in the country.
The level of the index based on the survey was carried out among 3000 households and financial confidence is a leading indicator accounting for consumer spending in the overall economy. The previous consumer confidence data was 95.3 and the forecast is 97.6.
USDINR Technical Analysis
USDINR MN Time Frame: Heightened Buying Pressure (Overbought area)
Monthly Resistance Levels: 82.00
Monthly Support Levels: 80.00
Since 2002, the dollar index has not traded above the 113 level, the dollar has surged since the Federal Reserve passed on the hawkish signals to online brokers, investors, and traders. This has also affected the Indian rupee as it went into its worst trading week for a while.
The monthly chart shows that the demand for the dollar is high as the expiry of the USDINR monthly futures contracts is an imminent over-the-counter market. Reserve bank of India will be offering a reference rate to banks that had built positions in OTC and the futures for them to take advantage of the arbitrage opportunity.
Weekly Chart
Weekly Resistance Levels: 82.00
Weekly Support Levels: 80.00, 80.50
The breakout above the previous resistance zone of USDINR on the weekly time frame last week was a result of the Fed’s decision to increase the interest rate as a measure to control the level of inflation. The breakout above has put the pair to another level on the forex platform as the Indian rupee lost value to the US dollar.
The broken resistance is now future support on the weekly chart. If the Indian rupee becomes stronger, the cu
Daily Projections: Breakout of Descending Triangle
Daily Resistance Levels: 82.00
Daily Support Levels: 80.00, 80.20
After the breakout of the scenario by the bulls, investors and online brokers will be looking for opportunities to trade in the US dollar against the Indian rupee. The report indicates that the Reserve Bank of India needs to intervene by selling the dollar via state-run banks as a mounting risk aversion and the rise in Treasury yields that has pushed the rupee to set a record low recently.
This trading week was set by the hawkish statement from the Fed officials as the Chicago Fed President Charles Evans and St.Louis Fed President James Bullard were also hawkish lifting the interest rates higher.
Bullish Scenario:
Presently, the USDINR pair is bullish and the trend will continue to run until a floor is set. The weakness of the Indian rupee will continue to allow online brokers to take the price higher. The market is on a bullish run and the momentum will likely take it higher.
Bearish Scenario:
From the Forex platform, the Bearish scenario may not take place anytime soon because the market structure for the Bears to reverse the trend is not established. The only zone for the bears to overturn the trend is the previous resistance level (80.00) turned to support for them to give the Indian rupee an edge in the market.
USDINR Conclusion and Projection
As the USDINR pair enters into another high of 81 and 82 zones, the Indian rupee has seen a series of losses against the US dollar. However, the intervention of the Reserve Bank of India may likely lead to a reversal of the trend on the daily chart depending on how long they can sustain the intervention of the Indian rupee on the forex platform.
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