- The US dollar spent the majority of the month of November rising against multiple currencies, and the Indian rupee isn’t any different, as we've been in an uptrend for what seems like a lifetime here.
- Now that we are well above the previous resistance area of 88.50, we find ourselves even above the 89 rupee level, which is very bullish, but all things being equal, this is a market that continues to be more or less buy on the dip as far as attitude is concerned.
- It is very likely that sooner or later the US dollar will go looking to the 90 rupee level. It makes sense as it's the next large, round, psychologically significant figure. And of course, we've been in an uptrend for so long, it's difficult to imagine that we are suddenly going to change our direction.
The Bank of India has its hands in this pair from time to time, and it basically keeps the Indian rupee from entering a freefall. There's nothing on this chart that suggests that we are even remotely close to turning the trend around. And with that being the case, I think you need to be very cautious about trying to play the short side.
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Rupee Pressure from Economic and Trade Factors
With that being the case, I look at dips as the ultimate entry, and especially if we were to get close to the 88.50 level. It's worth noting that the interest rate differential between the United States and India still favors the Indians. But the economic outlook for India is poor enough at the moment, and of course, we still have the overhang of tariffs and situational trade with the United States that comes in and causes a bit of a headache for the Indians. And with that, it does make a certain amount of sense that the rupee struggles.
If the global economy slows down, that also works against the Indian rupee as it is so highly sensitive to the overall global risk appetite and, of course, trade flows. With that being said, I do believe the US dollar continues higher, but we will have a pullback or two during the month that traders will be able to take advantage of.
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