USD/INR: Indian Rupee Recovered from Last Week Losses

The Indian Rupee has managed to recover all the previous week losses and it’s on track to post gains for the six consecutive trading day. The Indian Rupee has slowly and moderately gained strength taking advantage of the broad-based dollar weakness.

The Indian Rupee closed at 70.800 against the greenback at the end of the Tuesday trading session. At 8:00 AM BST, the Rupee was trading at 70.935 slightly down from yesterday’s closing price. Most Asian currencies were trading lower in tandem against the greenback.

The US Dollar index, which tracks the relative value of the greenback relative to a basket of other major currencies, is trading slightly up relative to the previous trading day closing price of 97.52.

NIFTY 50 settled at 11588 registering a modest loss of 69 points. However, the domestic equity market surged during the Asia trading hours recovering most of the previous’ day losses. The strength seen in the domestic equity market index can promote more risk taken from investors abroad, which in turn can fuel the USD/INR exchange rate to make a decisive break to the downside.

The main catalysts and market drivers behind the recent positive optimism are the growing expectations of a trade deal between the two most powerful economies in the world. US President Donald Trump and the Chinese President Xi Jinping are expected to sign a partial trade deal next month Asia-Pacific Economic Cooperation summit in Chile.

The current US commerce secretary, Wilbur Ross hinted that the US will soon release a trade deal draft that will address the US — India trade issues. There are strong hopes that a trade agreement can be reached quite quickly.

USD/INR Technical Pattern

The USD/INR exchange rate remains range-bound between the key support level 70.350 and key resistance level and round number 72.000. As long as the USD/INR exchange rate remains trapped inside this consolidation we should expect more range bound activity. Only a clear daily break and close above or below these mentioned levels could save the Indian Rupee from this range trap. And, the market driver for a breakout can only be provided by a fundamental catalyst.

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