The USD/INR exchange rate settled 23 paise lower at 70.67 to the US dollar on Wednesday and it was seen trading around 70.50 low before the London opening session. Indian Rupee gains against the greenback were capped due to the “Buy the rumor, sell the news” market phenomenon.
According to the market expectation the US Federal Reserve cuts its benchmark interest rate by 25 basis points to a range of 1.5% to 1.75%. Since the beginning of 2019 the Fed has lowered interest rate for the third time and the process was portrayed by the Fed Chairman Jerome Powell as a “mid-cycle adjustment.”
Along with the easing monetary policy the Fed also indicates that it may pause its easing efforts raising the bar higher for future rate cuts.
Globally, the US dollar has responded negatively after the Fed interest rate decision. The dollar index, which gauges the greenback’s strength against a basket of major currencies closed the previous trading day lower at 97.45
During the Asia trading hours, the NIFTY 50 was quoted around 11927 after it gapped higher at the opening price. The data showed that foreign institutional investors are net buyers of domestic equities. The Indian 10-year government bond yield has registered a 1.44% surge being quoted around 6.778.
The US President Donald Trump planned to sign a partial trade deal with the Chinese President Xi Jinping next month in Chile. But, he partial trade deal between the two most powerful economies in the world US and China is put in jeopardy due to the Asia-Pacific Economic Cooperation summit in Santiago being cancelled. A White House spokesman told the press that the Trump administration still seeks to finalize the phase-one deal.
USD/INR Technical Pattern
On the technical level, the USD/INR exchange rate continues to remain trapped in a consolidation. Not even the US Fed delivering on its rate cut was able to generate enough volatility to motivate a breakout. Investors should keep their eyes on key support level 70.350, while on the upside; traders should eye the key resistance level established around the 71.000 level.