The Indian rupee opened 15 paise lower at 81.39 per dollar on Thursday against the previous close of 81.24 per dollar. The local unit is expected to appreciate amid a weaker dollar, the decline in crude oil prices, and as long as the USDINR pair stays under the 82 mark. Further, the anticipation of a weaker set of housing and manufacturing data from the US could restrict the recovery of the dollar, according to analysts. “Series of weak economic data from the US has fuelled expectations that Fed will reduce the magnitude of a rate hike and may even pause it, going forward. US$INR 81.20 is key support. A move below would weaken it towards 81.0, followed by 80.80,” said ICICIdirect.
USDINR (Spot) to trade sideways
“Rupee rose sharply after falling the other day on broad weakness in the dollar against its major crosses and as some foreign banks sold the greenback, likely on account of overseas investment into domestic markets. The dollar was weighed down in the latter half of the session after data from the US showed retail sales fell 1.1% in December followed by a 1% drop in November. Today, the focus will be on the Philly Fed Manufacturing index and housing numbers from the US. Better-than-expected economic data could support the dollar at lower levels. We expect the USDINR(Spot) to trade sideways and quote in the range of 81.20 and 81.80,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Dollar likely to remain under pressure amid weaker US economic data
“Following weaker US data, the US Dollar index tested its fresh 7-month low, Euro jumped above 1.0880, and the Pound above 1.2430 levels. Whereas, Indian Rupee too appreciated to 81.16 in the late evening of NDF market. However, hawkish comments from a few Fed members helped the US Dollar index to recover the losses from 101.50 to 102.50 levels and led to a fall in Euro, Pound and Rupee. USD is likely to remain under pressure due to weaker US economic data and a long streak of FDI flows. There would be volatile sessions ahead, with resistance near 81.75 to 82.00. Whereas, support is located near the 81.20-30 zone. By any chance, if the pair breaches the support then it could move towards 80.80-80.50 levels,” said Amit Pabari, MD, CR Forex Advisors.
Short traders may book profit at these levels
“The USDINR 27 January futures contract was unable to sustain above 81.85 and slipped again. On the daily technical chart, we observed that the pair is trading below its resistance level of 81.85 and MACD is also showing negative divergence. Looking at the technical set-up, RSI is fetching below 50 levels and the pair is facing resistance around the 81.85-82.05 zone. The pair is showing weakness on the chart and if it trades below 81.85 levels it could test 81.10-80.95 levels; resistance is placed at 81.85-82.05 levels. Short traders are suggested to book profits as soon as the pair reaches 81.10 levels,” said Rahul Kalantri, VP of Commodities, Mehta Equities Ltd.
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