The USD/INR has been slightly negative during the trading session on Wednesday as we are drifting sideways. However, it’s worth noting that the CPI numbers coming out on Thursday will give us a bit of a “heads up” as to what the Federal Reserve is going to do. The Consumer Price Index indicator is one of the big ones that the Federal Reserve will follow, giving us a bit of a “heads up” as to what monetary policy may be. For what it is worth, the Producers Price Index came out a 0.4% during the session on Wednesday, which was double the anticipated 0.2%. This shows that inflation is still roaring in the United States, and if the CPI numbers show the same thing, we should eventually see the US dollar take off yet again.
You US dollar has shot up rather hard against the Indian rupee, so now a little bit of a pullback did make some sense. We must work off some of the excess “froth” in the huge uptrend that we have seen over the last several weeks. Over the last several months, we have seen it uptrend as well, but there was a bit of consolidation late summer.
Dollar Likely to Continue Strengthening
- Underneath, we have the 50-Day EMA near the ₹80.50 level and rising.
- That should offer a bit of dynamic support on any type of significant pullback, something that would be welcomed at this point because it would give you the ability to pick up “cheap US dollars” against an emerging market currency.
- Emerging market currencies continue to get hammered due to the inflationary situation around the world, and the spiking US dollar.
- Remember, most of these countries have their debts placed in US dollars, so therefore they need to buy them to pay back bonds, etc.
Furthermore, a lot of the emerging markets do not find buyers for their products, at least while there is a global slowdown. Money runs to where it’s safest in these times, and the United States is by far the biggest safety play out there. If the Federal Reserve does begin to get information that could make it pivot, then we could see this pair fall. I would not hold my breath for that happening anytime soon though.
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