USD/INR – Weekly Outlook for July 13 2019
USD/INR Forecast & Technical Analysis
Introduction
Over the course of three weeks, the bullish trend of the USD/INR persists as revealed on major India forex broker platforms as the US/China trade war continues.
Read on as we analyze both fundamental and technical drivers of price this week.
India’s Fundamentals
India’s FX Reserves (USD)
A nation’s Foreign exchange reserve (FX) is used in settling the balance of payment deficits between other countries, as a precaution against financial crisis, and an intervention tool used to influence the exchange rate.
The FX reserve for 12 July ’19 was released at 429.91 Billion, a value higher than the previous reading of 427.68 Billion, indicating a bullish Indian Rupee.
India’s Consumer Price Index
The CPI is great at estimating variations in inflation and trends of purchases.
An increase in a nation’s CPI alternates, depending on whether the country is in a recession or not. In a situation where there is a recession, an increase in CPI will consequently result in further depreciation of the currency.
For a steady economy, an improvement in the CPI, in this case, signifies an increase of the Indian Rupee.
The actual value was released at 3.18% which is less than t forecast of 3.20, representing a bearish outlook for the Indian Rupee.
United States Fundamentals
The US PPI- Producer Price Index
The PPI is a leading macro indicator that gauge the variation in the price of manufactured goods sold. It generally accounts for the majority of inflation for the greenback.
The actual value was released at 1.7%, which is higher than the forecast at 1.6%; however, less than the previous of 1.8%.
USD/INR Technical Analysis
USD/INR Weekly Chart
Following a price decline from the 08 October’18 high of 74.044 INR, the USD/INR entered a series of consecutive bearish closing candles, that later transitioned into bearish parabolic waves forming lower highs.
The long term bullish support set by a breakout of bearish accumulation on 22 April ’19 (68.602 INR) finally gave in to selling pressure on 01 July 01 ’19 after an earlier breakdown of hidden bullish accumulation on 24 June ’19.
At press time, the pair trades above the weekly bar open price and at a weekly high of 68.778 Indian Rupee.
USD/INR Daily Chart
From a daily time frame overview, the bears crashed below bullish support on June 18 ’19 and sets resistance at 69.97 INR, and resulting to a 1.97% decline in the USD to INR exchange rate.
The bears intensified their hold by signaling a collection of bearish pressure on July 02 ’19, and resistance at 69.034 INR.
Let’s take a step lower to the 4hour time frame where we analyze the price breakdown and signs of recovery for the USD.
USD/INR: 4Hour Chart
A view from the 4hour time frame reveals a retracement of the bearish descent, by signaling a regular bullish divergence on 07 July ’19 20:00 (68.296 INR).
The price rally from the July 07 bullish divergence did not last for long as the bears built up huge selling pressure on July 09 ’19 12:00 with resistance set at 68.618 INR.
After the bearish signal of July 10 ’19 08:00, the bears forced the price down and later recoiled into a bullish upbeat on July 11 ’19 08:00 by the formation of regular bullish divergence and double bullish divergence setup as shown on the updated chart below.
USD/INR 1HR Chart
Zooming way down to the 1hour intraday chart shows a regular bullish divergence pattern signaling a retracement of the bearish trend. After a series of upward parabolic cycles, the price came crashing down from an increase in selling pressure on July 09 ’19 01:00, and setting resistance at 68.778 INR.
Above is an update to the 1hour chart of the USD to INR rates, as it signals a regular bullish divergence setup on July 11 ’19 08:00. The bullish move was reinforced by mild bullish support levels at 68.176 INR and 68.274 INR respectively.
Conclusion and Projection
In the long term, the USDINR appears to maintain a bearish outlook, which is positive for the Indian Rupee. However, the lower 4hour and 1hour time frames may present short term bullish swings to ride.
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