Bullish View
- Buy the USD/INR and set a take-profit at 81.
- Add a stop-loss at 78.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 79 and a take-profit at 78.
- Add a stop-loss at 81.
The USD/INR pair continued its bullish trend and is hovering near its all-time high. It is trading at 79.20, which is about 7.5% above the lowest level this year. The Indian rupee has crashed by over 25% from its lowest point in 2018.
Indian Rupee Crash Continues
The USD/INR pair has been in a strong bullish trend in the past few months as the dollar strength continues. The dollar has gained against most developed and emerging market currencies. For example, the euro crashed to a 20-year low against the US dollar. Similarly, the Japanese yen has fallen to a 24-year low.
The Indian rupee has crashed even as the economy has done better than other countries. Data published in June showed that the country’s economy expanded to over $3 trillion and is about to become the fifth-biggest economy in the world.
Data published on Monday showed that India’s exports rose to over $37.94 billion in May while imports rose to $63.5 billion. As a result, its trade deficit widened to over $25 billion. Still, exports have jumped on an annual basis.
Additional data showed that India’s services PMI rose from 58.9 to 59.2, which was better than the median estimate of 58.7. The manufacturing sector has also continued doing well in the past few months. This performance is partly because India has benefited from the crisis in Ukraine since it is getting cheaper oil and gas from Russia.
The USD/INR is rising as the actions of the Federal Reserve and the Reserve Bank of India (RBI) converge. The Fed has hiked interest rates three times this year and analysts expect that it will hike in all the remaining meetings. The RBI has also turned hawkish and is expected to hike rates several times this year.
USD/INR Forecast
The four-hour chart shows that the USD/INR pair rose to a high of 79.35. This price is significantly above the important support at 78.28, which was the highest point on June 13th. The pair has moved above the 25-day and 50-day moving averages. The Relative Strength Index (RSI) and the MACD have continued rising.
Therefore, the pair will likely keep rising in the near time. The next key resistance level to watch will be the psychological level at 81.
