USD/INR – Weekly Outlook for July 26 2019
USD/INR Forecast & Technical Analysis
Introduction
Last week’s bullish price close alongside fundamental events set the USDINR for an upswing on Olymp Trade platforms.
Read on as we analyze the significant technical price drivers as well as some fundamental events.
India’s Fundamentals
India FX Reserves (USD)
International FX reserves comprise foreign currency assets, SDRs holdings, gold, and reserve seat in the IMF.
They are used to reconcile the balance of payments deficits among countries. They also cover foreign currencies, other assets titled in foreign currencies, and a particular amount of special drawing rights (SDRs).
An FX reserve is a valuable forethought for countries opened to financial pressures as it can be used to mediate in the exchange market, to control or peg the exchange rate.
A greater than anticipated reading should be considered bullish for the INR, while a reading less than anticipated is seen as negative for the currency.
From the latest data released on July 21, the actual reading was 428.80B, 1.11B less than the previous reading which was 429.91B signaling a slightly bearish sentiment for the Indian Rupee (INR).U.S.
United States Fundamentals
The US PMI is a leading indicator of overall economic performance. It evaluates the activity level of purchasing managers in the manufacturing space.
Expansion in the sector is indicated by reading beyond 50, while a reading less than 50 indicates a contraction in the sector.
A higher reading is seen as a bullish trend for the USD while a less than anticipated reading should be seen as bearish for the currency.
As per the latest release, actual reading was 50.6, while the forecast was still pegged slightly above the 50 mark, at 50.1 as was the previous reading, signaling a positive/bullish sentiment for the USD.
USDINR Technical Analysis
USD/INR: Monthly Chart
Last year November ’18, the USDINR exited the overbought area and sets resistance at 74.528 INR as shown on the monthly time frame above.
The USD to INR pair shows longer lower wicks compared to the upper wick, an indication of support.
Further analysis revealed an Ichimoku Kinko Hyo support level at 68.844 Indian Rupee, and the current month struggles to close below this level.
USDINR: Weekly Chart
From a weekly chart perspective, the USDINR enters a downward spiral making significantly lower lows on March 04 ’19 and 20 May ’19 at 71.920, and 70.776.
The exchange rate fails to close below the previous 68.346 support and has closed bullish for two weeks in a row now.
USDINR Daily Chart
From a weekly chart perspective, the USDINR enters a downward spiral making significantly lower lows on March 04 ’19 and 20 May ’19 at 71.920, and 70.776.
The exchange rate fails to close below the previous 68.346 support and has closed bullish for two weeks in a row now.
USDINR 4H Chart
Moving way down to the 4hour chart, we notice the exchange rate breaking out of a descending channel built from a hidden bearish divergence and regular bullish divergence on July 09 ’19 04:00 and July 11 ’19 08:00, setting resistance and support at 68.618, and 68.123 respectively.
Recent regular bearish divergence patterns signaled on July 18 and 22 ’19 could not stop the bulls from advancing further as they force their way through the resistance levels.
Conclusion and Projection
The USDINR currently maintains a bullish outlook as the price hovers above the 68.793 support. A price close below the support may show a decline in demand for the USD.
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