The US dollar has enjoyed a relatively large move to the upside against multiple currencies for the last couple of months. It has been no different againts the Indian rupee, as emerging markets in general have struggled. With concerns about increasing coronavirus figures, global growth slowing down, and simple inflation, the US dollar has been what most people have been willing to bet on.
Recently, we have seen the interest rates in America rise, only to turn back around as traders trying to figure out what the Federal Reserve is about to do. With the concern about supply chain issues, it has made trading the markets very difficult over the last couple of months. However, the Reserve Bank of India keeps a close eye on this exchange rate, thereby setting a nice opportunity for those looking to trade a range-bound market. Nonetheless, we have certainly seen quite a bit of upward pressure as of late, and sooner or later the US dollar should prevail.
As things stand currently, the 75.50 rupee level seems to be very difficult to break above. We had tried to break out during the previous month but failed. You can see there is a weekly shooting star right at that level, which will attract a certain amount of attention by technical traders. Another thing to pay attention to is that we have seen a significant amount of support near the 73.50 rupee level, so I think this will be your range for the month. It certainly looks as if there is more of an upward tilt in this market, which makes sense considering just how well the US dollar has done against multiple other currencies. All one has to do is look at the euro, pound, or even the Japanese yen over the last several weeks. In a scenario where the US dollar is acting like a wrecking ball against so many of those currencies, a smaller one like the Indian rupee certainly stands no chance. Ultimately, I believe this will be a “buy on the dips” scenario over the next several weeks. Also, the market has the 50-week EMA just below, so that could give a little bit of psychological and technical support to the greenback. If we can break out to the upside and above 75.50, then 76 will be targeted.
