USD/IDR: Bears await Bank Indonesia decision to extend downpour beneath 200-DMA

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  • Repeated failures to cross 200-day SMA ahead of Thursday’s Bank Indonesia meeting.
  • Mixed data, global recession fears can push BI towards another no rate change decision.

Having failed to cross the 200-DMA, the USD/IDR pair remains on the back foot as it takes the rounds to 14,272 during early Wednesday. While today’s FOMC meeting can act as a major market moves, Thursday’s monetary policy decision by the Bank Indonesia (BI) will be closely observed for near-term trade direction.

Despite upside surprises by the Indonesian inflation and consumer confidence data, sluggish retail sales and GDP figures continue to favor no change in the central bank’s monetary policy offering 6.0% BI rate.

Pessimism surrounding the global trade outlook led by the US-China tussle also weighs on the Southeast Asian economy.

TD Securities holds a dovish view for the Indonesian economy while expecting no change in Thursday’s monetary policy meeting. It says:

BI is edging towards a rate cut amid low inflation and slowing activity, but will likely want to see further signs of IDR stability before pulling the trigger to begin reversing the 175bp of hikes implemented in 2018.

The country’s Finance Minister, Sri Mulyani Indrawati, recently cited fears of global growth due to trade wars to support chances favoring the easy monetary policy from the BI.

On the other hand, the US Federal Open Market Committee (FOMC) is also not expected to alter its monetary policy but may have a higher market impact as trades will have the Federal Reserve Chairman Jerome Powell’s press conference and quarterly economic forecast to follow.

Technical Analysis

Unless breaking 200-day simple moving average (SMA) level of 14,435, the quote continues to signal another visit to 14,150 and 14,000 ahead of aiming to visit the April month bottom around 13,970.

Meanwhile, 21-day SMA can limit immediate upside at 14,307 ahead of highlighting 14,435. Should buyers manage to cross the key SMA resistance, 14,550, 14,620 and 14,662 might become their favorites.

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