The Indian rupee remained strong against the U.S. dollar last week. Major Asian currencies found support as the U.S. dollar continued trading weak. It falls after the Fed recent policy and on receding fears about the U.S. banking sector.
Greenback weakened near its seven week low as traders contemplated the Federal Reserve’s next move. As confidence in the banking sector remained fragile. Further, easing worries about a banking crisis revived investors’ also weighing on sentiment.
The dollar index, which measures the currency against six rivals, was 0.72% and made a low 101.91. Closer to the near seven-week low in last week.
Lower risk aversion prompted investors to reconsider expectations regarding the U.S. Federal Reserve’s rate path. The odds now are almost 50-50 on whether the Fed will hike rates by 25 basis points. At the May meeting or opt for a pause.
Asian currencies were up 0.2% to 0.6% while the dollar index declined to 102.60 earlier today. The USDINR pair traded flat at 82.20 levels. A deal to buy the assets of Silicon Valley Bank (SVB) allayed concerns about the U.S. banking sector to an extent. Undermining demand for the safe-haven dollar.
Investors took solace from First Citizens BancShares’ agreement to buy all of failed lender Silicon Valley Bank’s deposits and loans. And the fact that no further cracks have emerged in global banking in recent sessions.
Further, the upcoming Reserve Bank policy meeting on 3 April 2023. And Domestic trade data on 31 March will have a significant impact on the Rupee.
Technical View- USDINR Spot
A long term consolidation was noted on the above daily chart. Since Mid December 2022, the USDINR pair has struggled to cross massive resistance 83.05 on a closing basis. And it is retreating towards 81.05 levels.
A falling three candlestick pattern was noted on the weekly chart, which is indicating bearish momentum in the near future. However, pairs would need to break 82.00 levels in order to test 81.50-81.00.
Else, failure of the break could witness pullback towards 82.65-82.95 again in days to come.
Hence, it is expected that the USDINR pair may remain below 83.00 in near future.
However, any disappointment from the US bank crisis or global jittes may lead to an abrupt bullish rally in the dollar again. If USDINR breaks 83.00 then it may test 83.55-84.00 on the upside.Â