USDINR – Sentiment may remain negative if USDINR Spot failed to break 81.85
Dollar/Rupee settled down by 0.13% at 81.4710 as compared to previous 81.5740 on Wednesday, as weakness in US dollar continued weighing on sentiment. Dollar index which measures the greenback against a basket of currencies, tested 101.504 its lowest levels in nine month low and settled at 101.5920.
The dollar lolled near an eight-month low against its peers on Thursday, as a gloomy U.S. corporate earnings season stoked recession fears and as traders stayed on guard ahead of a slew of central bank meetings next week.
Downbeat earnings and guidance from U.S. corporates and a string of tech sector layoffs have deepened fears of an economic downturn in the United States, leading investors to pare back expectations on how much longer the Federal Reserve will need to aggressively raise interest rates.
Dollar also sagged close to a nine-month low versus the euro, amid market expectations the European Central Bank next week will implement a rate hike twice as big as the Federal Reserve’s.
The Fed’s policy-setting committee will begin a two-day meeting next week, and markets have priced in a 25-basis-point interest rate hike, a step down from the central bank’s 50 bp and 75 bp increases seen last year.
Markets expect policymakers at the Bank of England and European Central Bank (ECB), who will also meet next week, to deliver 50 bp rate hikes. The ECB is seen most likely to remain hawkish.
Technical View
On daily chart, USD/INR struggling to cross its 200 SMA and making lower low. Today, a break below 81.3500 would extend recent losses and pair may drop towards next support 81.20-81.0.
On the upside, resistance is seen at 81.85 and a break above only would open the door for next resistance 82.35-82.65.
Further, Cautious trade could be seen ahead of Union Budget and FOMC meeting scheduled for next week.