- USD/INR wavers near two-week low, keeps downside break of six-week-old support line.
- Bloomberg said that Indian economy showed more signs of a recovery in October.
USD/INR consolidates the previous day’s losses while trying to keep 74.00 during early Wednesday. In doing so, the pair justifies Bloomberg’s optimistic analysis of the Indian economy while also respecting the downside break of an ascending trend line from October 12, marked on Tuesday.
“Demand during the festival season helped boost three of the eight high-frequency indicators tracked by Bloomberg News last month, while three were unchanged and two deteriorated,” as per Bloomberg. GDP, trade numbers and activity data are among the eight catalysts tracked by the news.
Other than the upbeat forecast for the Indian economy, broad risk-on mood, mainly backed by hopes of further stimulus from the US and improvement in the world’s largest economy backed by the President-elect Joe Biden, also weigh on the quote. Further, recent downbeat data from the US, namely the Consumer Confidence and Michigan Fed Manufacturing Index, offered additional weakness to the USD/INR prices.
That said, stocks in Asia Pacific print mild gains while taking clues from the S&P 500 Futures amid hopes of the coronavirus (COVID-19) vaccine acting as an extra back-up to the risks.
Moving on, risk catalysts to remain as the key drivers ahead of the US Q3 GDP as well as the FOMC minutes.
Read: US GDP Preview: Good reasons for an upside surprise, but not necessarily a dollar surge
Technical analysis
With the normal RSI conditions backing the downside break of the key support, now resistance around 74.05, USD/INR sellers can target a 50-day SMA level of 7383 during further downside. It’s worth mentioning that the 21-day SMA and monthly resistance line, respectively around 74.27 and 74.60, challenge the bulls even if they manage to regain the stand above the previous support line.
Trend: Further weakness expected
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