- USD/INR holds on to bounce from 50-DMA as the US Dollar becomes market favorite.
- Economic worries surrounding Indian growth, trade/political headlines added to the pair’s strength.
With the King Dollar (USD) holding its head high against major counterparts, the USD/INR pair takes the bids to 71.08 by the press time of the pre-European session on Wednesday.
The US Dollar (USD) has been on the run-up since early Asian session after the news broke that the US President Donald Trump faces an inquiry that can lead to his impeachment if it's proven right that the Republican leader meddled in Ukrainian politics.
Also exerting the political pressure is President Trump’s remarks at the United Nations General Assembly that the bad deal with China won’t be acceptable. In a reaction, China’s Foreign Minister criticized the US policies of interfering into Hong Kong issue but news of the dragon nation’s readiness to buy more of the US farm products seems to have settled the gap.
On the other hand, Indian traders are also not happy with the government’s latest stimulus measures as the Asian Development Bank (ADB) cut India’s growth forecast to 6.5% for the current fiscal year. “India’s growth forecast for the fiscal year 2019 (FY20) is lowered to 6.5 percent after growth slowed markedly to 5 percent in the first quarter, April-June,” mentions the Asian Development Outlook (ADO) 2019.
Additionally, National Australia Bank’s (NAB) senior economist Gerard Burg also cut Indian growth forecast as the NAB’s report on Tuesday said, ““We have lowered our forecast for Indian growth, given the weaker than expected outcome in Q2, with growth at 5.7% in 2019, 6.8% in 2020 and 7.1% in 2021. Easing monetary policy is expected to support a modest recovery in the short term (led by investment), however downside risks (particularly around consumption) persist.”
While no major data is up for release from Indian side during this week, comments from the Federal Reserve policymakers and trade/political headlines will be the key to forecast the near-term trading pattern of the pair.
Technical Analysis
Considering the pair’s recent bounce, 21-day simple moving average (DMA) level of 71.50 regains buyers’ attention ahead of three-week-old falling trend-line near 72.15. On the downside, pair’s daily closing below 50-DMA level of 70.85 needs to slip beneath recent lows surrounding 70.70/65 in order to revisit 100/200-DMA confluence nearing 70.10/12.
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