The dollar/Rupee dropped below its three-week low, weakness in the U.S. dollar will put further pressure on the pair.
The dollar/Rupee pair dropped below its three-week low today following the weakness in the U.S. dollar and after WPI data.
The pair hit the day’s low of 82.0790, its lowest level since May 12, and was down 0.15% at 3.00 p.m. IST. The pair was settled at 82.20 in the previous session.
India’s wholesale prices data released today, dropped by 3.48% from May of last year, according to government data released on Wednesday. The rate of inflation fell in May 2023, primarily due to lower costs for mineral oils, basic metals, food, textiles, non-food items, crude oil and natural gas, chemicals, and chemical products.
Monthly, the Food Index decreased from 173.6 in April 2023 to 172.8 in May 2023. Based on the WPI Food Index, the rate of inflation dropped from 0.17% in April 2023 to (-) 1.59% in May 2023.
The dollar traded around multi-week lows against its other major counterparts. Unexpectedly weak U.S. inflation figures reported on Tuesday led to a decline in the value of the dollar, which solidified the Federal Reserve’s decision not to hike interest rates later that day.
The U.S. consumer price index (CPI) recorded a 4.0% year-over-year increase in April, which was the smallest increase since March 2021.
Technical Outlook:
The Dollar/Rupee pair turned bearish from the peak of 82.87 (22 May 2023 high) and continued trading on the downside. The pair drops almost 0.90% from the top.
Today, the pair is trading at 82.1150, just near its three-week low, down by 0.12%.
On the above chart, the pair is forming a rectangle triangle pattern, where it faced the resistance of 82.90 levels and turned back again. Now, the pair appears to drop further and could test 81.90-81.65 very soon.
Immediate support is seen at 82.10, a break below it will extend the recent fall.
Alternatively, on the upside, resistance is seen at 82.35-82.65-82.75.
Overall sentiment looks bearish, and any rate pause news by Fed policy will put pressure on it. The Fed decision is due later today.