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USD/INR outlook-Look to test 65.75-65.85 again by coming week

14 Nov 2017

As shared earlier multiple times 64.75 levels was good opportunity for the importers to stay covered for near month imports while exporters may choose to wait for better levels to sell. The major driving factor in this run up for rupee weakness has been the rise in the crude prices. Brent crude oil prices that rose to over two-year high of $64.65 per barrel last week, amid political tensions in the Middle-east and ongoing OPEC-led production cuts.

On the other side with the rise in crude prices,weaker domestic data this week, including higher inflation and wider trade deficit, if realised, would risk a topside break in USDINR above the September high of 65.89 risking and brining 66.20 into the picture. India’s retail inflation edged up 3.58% in October, fastest pace of price gains since March, against expected 3.46% rise and from 3.28% rise in September. Rise in U.S. yields and higher crude oil prices has supported dollar against all the major Asian currencies.

What’s on the charts?

After multiple attempts to break 65.20 on the upside finally rupee breaks it and manage to close above it confirming the near term trend on the upside for the move of 65.75-65.85 region where we would expect the selling pressure to resume and if that breaks further upmove to 66.20 cannot be ruled out in January or last December.As seen on the Daily chart the pair is trading in the channel formation and now resistance has turned support at 65.20-65.25 mark where buying/importer interest will revive. Momentum indicators indicate further upmove and no sign of reversal is there yet,.

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