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USDINR – Weekly Outlook & Analysis for 5th August 2022

Introduction

The market started on a slower note for the dollar index on the Indian forex platform as Pelosi plans to arrive in Taiwan against the Chinese threat to the people of Taiwan. However, the dollar has lost some steam having reached the high of 80.00 during last month’s trading activities entering into the new month. Let’s analyze the charts for significant price levels and finish off on the recent news/fundamental events.

India’s Fundamentals 

India’s trade deficit is of concern to analysts when the report of trade deficit shows a record of about $31.01 billion in July compared to that of June which is $26.18 billion. Analysts think that the country is deteriorating and it will affect the Indian rupee and it will be under serious pressure. The head of currency derivatives at Kotak Securities Mr. Vikas Bajaj says that work has to be done on India’s current account deficit (CAD) and (Balance of Projection) BoP number considering the Rupee.

An analyst from Barclays thinks that the Indian trade deficits for a while, will be over $20 billion, posing greater current account deficit risks and how the RBI has spent over $60 billion in defense of the Indian rupee, reducing import covers as a result of currency reserves. The Reserve Bank of India is likely to hike the repo rate by 35 basis points by August 5 which will be followed by two more hikes y September and December.

US Fundamentals

THE USA HOURLY EARNINGS M/M

As we begin a new month, the USA average Hourly earnings will be rated by the bureau of labor when they rate the payment businesses payout for labor within various business activities excluding the farming sectors. However, traders, investors, and Indian brokers pay attention to the changes in the price that business owners pay labor. 

The report is also an avenue for checking consumer inflation because if businesses spend more during production or services, the cost of running the business is passed down to the final consumers, meaning that the consumer pays higher for the high cost of production. If the actual data shows that the rating is higher than the forecast, it is good for the economy and the currency but a lower outcome will affect the currency. Previously 0.3% and the forecast is 0.3%.

USDINR Technical Analysis

Monthly Chart Projection: Trades within the correction area

USDINR monthly chart - 5th August 2022

Monthly Resistance Levels: 76.45, 75.51, 75.00

Monthly Support Levels: 72.12, 72.3

Market participants and online brokers have not seen volatility on the forex platform in this recent month, just like the previous month before the market closed. The Bulls need the price to breakout above the 75.00 level for a significant takeover signature before the upward trend continues in the market.

The Monthly chart on the forex platform is bullish while the market structure shows that price is in its corrective stage and a bullish channel. If the price should close below the 72 support levels, we may say that the trend has changed into a bearish market and the Indian rupee will make progress against the US dollar.

Weekly Chart

USDINR weekly chart - 5th August 2022

Weekly Resistance Levels: 80.25.

Weekly Support Levels: 77.40, 77.00

For over 6 weeks the online brokers were able to hold their winning trades and gained about 3.49% from the support level of 77.40 to the resistance level of 80.25. the US dollar has been strong against the Indian rupee and other assets in the finance market. 

The weekly chart shows that the bullish trend may soon experience some degree of correction as last’s week’s candle did give us a bearish engulfing pattern. This is an early sign that the Indian rupee is gaining strength as the dollar showing weakness. If the dollar losses more momentum, the value of the Indian rupee will be increased and the traders who want to go short on the forex platform will hold their position for the price to retest the 77.40 zone.

Daily Projections:  Breakout of Descending Triangle 

Daily Resistance Levels:  80.00.

Daily Support Levels: 78.50, 77.00

The USDINR pair did about 3.76% run to the 80.06 price level when the Bulls broke out above the 77.00 level of previous resistance as of 03 June 2022. The pair had a pull back from the recent swing and the 50 moving averages will likely act as a support for the price to bounce from for the price to continue its up trend.

Bullish Scenario:

The USDINR pair is on the bullish run as the trend keeps making higher highs after the breakout of the 77.00 zones. Online brokers who intend to continue the bullish run will wait for the price to breakout above the recent resistance zone of 80.00 for the rally to continue.

Bearish Scenario:

The Indian rupee has made a dip retracement against the dollar and the Bearish Scenario is playing out as the price movement has pulled back about 50% of the bullish run. If the bullish surge fails to close above the current high, the sellers will take the price lower toward the 77.00 zones. 

USDINR Conclusion and Projection

We expect the USDINR pair to get a reaction around the 50 moving average lines on the forex platform as the price is in a correction stage of the market. If it acts as dynamic support the price will go up from the zone. However, if the US dollar gets weakened, we shall see the Indian rupee grow in strength.



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