Indian Rupee has caught some early bids against the greenback on Monday and closed the trading session at 70.757 after it failed to break below the key intraday support level 70.570. No noticeable developments have been spotted as the market keeps quiet in the absence of any significant macro economic factors to have the potential to generate some volatility. In the absence of fundamental data, we can expect the USD/INR exchange rate to be more sensitive to the technical levels.
The Indian Rupee is also caught in the US — China trade war, which lately has seen some positive progress. This new macro development should have helped the Indian Rupee to escape the current price range. However, until a definitive deal is reached between the two economies, we can expect these macro themes to put some weight on the currency exchange rate.
Indian benchmark indices NIFTY 50 was closed on Monday due to assembly election in Maharashtra. Last week NIFTY 50 settled at 11661 registering a gain of 326 points. The domestic equity market surged over 5.34% in the course of the last two weeks. The strength seen in the domestic equity market index can promote more risk taken from abroad investors, which in turn can fuel the USD/INR exchange rate to make a decisive break to the downside.
If we track the Indian Rupee year-to-date performance, we find that the exchange rate is only slightly lower against the US dollar. The Rupee has weakened only by 1.93%.
USD/INR Technical Pattern
The technical outlook for the USD/INR in the short-term remains range-bound unless it either manages to break below the key support level 70.500 or above the key resistance level 71.340. More importantly, the 200-day moving average is the line in the sand between the bulls and the bears.