USD/INR: Sensex Gains Shoring Up Rupee Against Greenback

The rupee has been relatively stable against the greenback, ever since the sharp decline of last Friday which occurred after the dismal NFP numbers were released. This stability occurred despite stronger than expected US economic news in the past 2 days which should have pushed the USD higher and hence USD/INR higher. This muted response can be attributed to the Sensex which continues to clock in mild gains, in line with global positive risk appetite. With the main stock index remaining bullish, India will be able to enjoy continued inflows from overseas investors willing to invest in the South Asia state which will keep the rupee afloat against a strengthening USD.

Hourly Chart
USD/INR Hourly" title="USD/INR Hourly" height="608" width="977">
That being said, the Sensex is currently trading lower, in line with a mostly bearish Asian session today. This suggests that the USD/INR may receive a short-term bullish push on rupee weakness. Technicals agree with prices currently rebounding off the Channel Bottom which opens up a move toward the Channel Top. Similarly, Stochastic readings also suggest that a temporary bullish cycle may be occurring with Stochastic readings bottoming out at the level where previous troughs have been seen since Monday.

Weekly Chart
USD/INR Weekly" title="USD/INR Weekly" height="609" width="977">
The Weekly Chart suggests that bullish momentum may go even further than simply the short-term channel top as prices are currently above the 61.3 level, suggesting that the breach into the 59.0 - 61.3 consolidation channel has failed, opening a potential move toward the Channel Top on the Weekly Chart. However, the direction of the Stochastic curve remains lower, and further confirmation of the 61.3 rebound is needed considering that the price is just around the 61.3 mark. Also, even in the event that the price trades higher from here out, bulls will still need to overcome the soft resistance around 62.5. Hence, do not be surprised if prices actually revert back lower, or perhaps continue to stay sideways as observed in the Short-Term chart as long as global risk sentiment remains the same.

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