The US dollar rallied a bit during the trading session on Tuesday as we continue to test the ₹74.50 level. This is an area that has been resistance over the last several days and that people have paid close attention to multiple times in the past. With that being the case, it looks to me like we are trying to break out, but the question now is whether or not we will continue to see this upward pressure, or if we are going to see the market rollover in the face of what has been very stubborn resistance?
Underneath, the ₹74 level should offer a certain amount of support, and if we do close below there on a daily candlestick, it is very likely that we will continue to go lower, perhaps reaching down towards the ₹73.50 level, where we have seen the 50-day EMA and the 200-day EMA indicators converge. That will more than likely cause a certain amount of technical support, but the question now is whether or not inflation weighs upon the US dollar, or does it branch itself out into the emerging market currencies? Currently, it looks as if this market is running into a little bit of exhaustion, which makes sense considering that we had gone straight up in the air. Because of this, I believe that the market probably will continue to see a lot of noisy behavior, but if we were to break above the ₹74.50 level, we still have a lot of noise all the way to the psychologically important ₹75 level.
I do believe that one of the things that you will have to pay close attention will be the coronavirus figures coming out of India, which had recently been very large and work against the Indian economy. At this point, the US dollar has some work to do, but if we can break above the ₹74.50 level, I think that ₹75 would almost certainly be in the cards. At the very least, we look a little exhausted, and I think that continues to push this market back and forth, with a lot of the confusion laid squarely at the feet of the Federal Reserve, who continue to go back and forth on whether or not there is going to be tapering anytime soon.
