Greenback’s undertone bullish bias signals further fall for Re

USD/INR has broken below its 21-day exponential moving average (EMA), signaling the possibility of further decline. Despite these short-term pressures, it’s important to acknowledge the overall bullish trend of both USD/INR and the Dollar Index. The range of 82.90-83 is a notable support zone. Given this chart setup, any dip below 83 could be viewed as a buying opportunity for those with a short-term perspective, said Tapish Pandey, research analyst at SMC Global Securities Ltd

Hovering in Consolidation Range

♦ USD-INR in consolidation range of 83.10-83.40

♦ May break below the support at 83.10

♦ Break below 21-day EMA suggests further fall

♦ Dollar index in 105.30-107 consolidation range

♦ Investors eye outcome of Fed meet in Nov

♦ Dollar index may rise if it holds 107

Hyderabad: Unabated offloading by Foreign Portfolio Investors (FPIs) and US dollar strengthening have been weighing on Indian currency. However, the Dollar index slipped into consolidation mode as the forex markets awaited the US Federal Reserve’s monetary policy to be announced in November. Rupee against Greenback was trading at 83.16 on Monday (October 23, 2023) from record low of 83.42 on October 13 and 83.45 on October 4. Home currency’s 12-month high was 80.50 on November 12, 2022, and 5-yr high was 68.44 on July 5, 2019. The expected range may remain within 82.85-83.30, forecast forex analysts. RBI intervention prevented further fall to below 83.25.

“Despite these factors, the Dollar Index’s overall trend has remained bullish since reaching 99.20 in July. The current sideways movement within the 105.30 to 107.00 range indicates a bullish bias. This range is acting as both a support and resistance zone,” Tapish Pandey, research analyst at SMC Global Securities Ltd, told Bizz Buzz.

Ongoing global uncertainty and geo-political tensions continue to have an adverse impact on the home currency. The Dollar Index against a basket of six currencies is hovering in a consolidation phase as it’s trading within 105.30-107 range and closed at 106.21 on Monday. This consolidation is a result of market participants assessing the Federal Reserve’s monetary policy. Fed Chair Jerome Powell’s concerns regarding inflation and economic growth are influencing market sentiment. There is an expectation of interest rates remaining stable at the November meeting. Recent economic indicators provide a mixed picture.

“If the Dollar Index manages to hold above 107.00, it could potentially reshape its upward trajectory. The 14-period RSI, positioned near 55-57, suggests a comfortable trading setup with potential momentum. In summary, the overall trend remains bullish, with room for potential upside. Even a dip to 105.30 may present opportunities for an upward reversal, with the possibility of further gains beyond 107,” forecasts Pandey.

FPIs offloaded over Rs12,000 crore from Indian equities in October so far thanks to a sustained rise in US bond yields and the uncertain environment resulting from the Israel-Hamas conflict. USD/INR is also moving in the consolidation phase within the 83.10-83.40 range after reaching a record high. However, the pair faced some pressure ahead of last weekend. A break below 83.10 may lead to further correction, potentially testing or breaching the 83 mark.

“The 14-period RSI momentum oscillator is around 45-47, indicating a bearish divergence and suggesting the potential for additional downward movement. Additionally, USD/INR has broken below its 21-day exponential moving average (EMA), signaling the possibility of further decline.

Despite these short-term pressures, it’s important to acknowledge the overall bullish trend of both USD/INR and the Dollar Index,” remarked Bisht.

The range of 82.90-83 is a notable support zone. Given this chart setup, any dip below 83 could be viewed as a buying opportunity for those with a short-term perspective. On the upside, 83.40-83.50 is expected to act as a resistance level in the short term.