On Wednesday, the Indian Rupee (INR) faced downward pressure amidst the continued strength of the US Dollar (USD). Despite the current trend, traders express optimism that the INR is poised to break out of its trading range and rally in the coming months, fueled by growing confidence among foreign exchange investors in India’s economic prospects.
Reserve Bank of India (RBI) Governor Shaktikanta Das, speaking at the World Economic Forum (WEF) in Davos, highlighted the volatility of food inflation, emphasizing its priority on the central bank‘s agenda. WEF president Borge Brende echoed optimism, stating that India’s growth story remains robust despite geopolitical tensions and a weakened investment cycle.
Looking ahead, investor attention turns to US Retail Sales data on Wednesday, projecting a 0.4% month-on-month increase. On Thursday, RBI Governor Shaktikanta Das is expected to share insights on key challenges, opportunities, and his perspective on monetary policy at the World Economic Forum Annual Meeting 2024 in Davos.
Technical Analysis: Indian Rupee Maintains Negative Stance in the Short Term
The USD/INR pair has exhibited weakness on the day, with the Indian Rupee trading lower against the US Dollar. Since September 2023, the pair has been confined within the 141.40-144.70 trading range. The prevailing bearish sentiment is reinforced as the pair remains below the crucial 100-period Exponential Moving Average (EMA) on the daily chart.
Short-term patterns indicate a somewhat negative outlook, supported by the 14-day Relative Strength Index (RSI) below the 50.0 midpoint. Immediate resistance for USD/INR stands at 83.40, with a decisive break potentially leading to extended gains towards the psychological round mark at 84.00. On the downside, initial support is at 83.00, while the critical contention level lies near the confluence of the lower limit of the trading range and a low of September 12 at 82.80.
Continued selling pressure could drive the pair to a low of August 11 at 82.60, followed by the low of August 24 at 82.40. Traders are advised to monitor these levels closely for potential shifts in market dynamics.
