Key points:
- Rupee unable to breach key resistance for three consecutive sessions.
- Market focus shifts to Fed Chair Powell’s remarks and U.S. inflation data for cues on the dollar’s trajectory.
The Indian rupee has struggled to gain ground, failing to break past the key resistance level of 83.50 against the U.S. dollar for three consecutive sessions. Market participants widely view this level as crucial for any sustainable upward movement in the rupee.
Picture: USDINR stalls at key resistance as markets await cues from Powell, as observed on the VT Markets app.
The trajectory seems largely dependent on external factors, including U.S. monetary policy. This week, the 1-month non-deliverable forward (NDF) suggests the rupee will open slightly weaker, hovering around 83.63 to 83.65, compared to its previous close of 83.59.
Traders have observed that 83.50 is proving to be a tough level for the USDINR currency pair to break through, reinforcing expectations of limited upside for the rupee in the near term.
Moreover, the initial enthusiasm across the Asian currency space, which was sparked by stimulus measures in China, seems to have faded. As a result, the broader market sentiment has cooled, further limiting the rupee’s ability to capitalise on any positive momentum.
The focus is now on the U.S. Federal Reserve Chair Jerome Powell’s upcoming comments and inflation data out of the U.S. These events are expected to provide a clearer picture of the Fed’s stance on interest rates and will likely influence global currencies.
With traders anticipating that Powell’s comments may offer hints on the pace of rate cuts, the U.S. dollar remains poised for further volatility, which in turn could affect the rupee.
Day Trading Outlook for the Rupee
For short-term traders, the 83.50 level remains a critical pivot point. If the rupee manages to break below this level, it could set up for a further rally towards 83.25.
However, without any fresh positive catalysts, the rupee could drift lower if Powell signals a more cautious Fed stance. Caution is advised for traders as market sentiment remains driven by U.S. data and Fed expectations.
