The US dollar pulled back the last couple of days against the Indian rupee but has recovered those losses quite easily. Because of this, it does suggest that perhaps there is still quite a bit of upward pressure on the USD/INR pair, which makes sense considering that the US dollar has been one of the stronger currencies globally. Beyond that, it also is gaining the benefit of interest rates rising in the United States. After all, the higher interest rates attract quite a bit of attention, as the safety and the return suddenly become much more interesting for traders than an emerging market currency.
The Indian rupee has been a little bit stronger as of late as the Delta variant starts to fade a bit in that country, but I think we will continue to look at the Indian rupee through the prism of whether or not there is more risk or not around the world. After all, money does not flow in places like India, South Africa, or other emerging markets unless traders feel comfortable taking risk on. The risk-on attitude will have people looking for higher returns, which you typically get in places like India.
The CBI, India’s central bank, seems to be okay with the range that we are in currently, and if you take a look at this pair from a higher timeframe, you can make a suggestion that the ₹74 level is significant support, just as the ₹75 level above is resistance. The 50-day EMA sits near the ₹74.17 level and has offered support over the last several days. The fact that the market is starting to see the 50-day EMA as a potentially important indicator does suggest that the uptrend is starting to pick up a bit of steam. If we can break above the ₹74.50 level, then it is very possible that we will go looking towards the ₹75 level above where we have pulled back from. The ₹75 level being psychologically important also is something worth paying attention to, as the market breaking above there will then probably attract more interest. Keep in mind that Wednesday has the Consumer Price Index figures coming out of the United States and therefore we could see a big move in the US dollar overall.
