The US dollar initially tried to rally against the Indian Rupee during the trading session on Thursday, as we continue to see a bit of a recovery from the pullback towards the ₹75 level. The 50 day EMA underneath has shown itself to be supportive, and with that being the case the technical analyst would have been a buyer based upon the hammer from several days ago. However, the ₹76 level being broken to the upside was not enough to change things in the short term, due to the fact that the futures market in the United States ended up seeing negative interest rates coming in January 2021.
The shape of the candlestick is rather negative, so we could see a little bit of a pullback from here but I would not anticipate a major breakdown, simply due to the fact that if we are in fact seeing negative interest rates coming out the United States, which in theory would be negative for the greenback, it also shows that there is a lot fear out there and to think that India is going to be the place the people run towards is a bit of a stretch. The ₹75 level should continue to offer support, although we may have a bit of noisy trading during the trading session on Friday as it is Non-Farm Payrolls in the United States, and this of course is an exotic currency pairs of the volume will not necessarily be strong.
I do believe that there is a “band of support” that extends all the way down to the ₹74 level, so if we were to break down below that level it is likely that we could see the “trapdoor” open up and the market could crash quite a bit lower at that point, probably reaching towards the 200 day EMA. In the short term though, I anticipate that we will probably continue to see a lot of back and forth in this area as the ₹75 level will be the area that most traders are watching in general. Ultimately, we have not broken through the uptrend line either, so that is another think that the buyers will be looking towards. Ultimately, this is a market that continues to see a lot of volatility and that makes quite a bit of sense considering everything that is going on right now. Much of the selling during the trading session on Thursday will have been due to the US dollar getting hit suddenly, whether or not that sticks in general is a completely different scenario.