Indian rupee rallies to fresh four-month highs near 73.80

  • The rout extends, as USD/INR breaches key support on Monday.
  • Renewed US dollar weakness amid pullback in yields supports the downside.
  • USD/INR eyes September 28 low at 73.74 after November lows give way.

The selling interest around USD/INR remains unabated, as the pair falls for the fifth consecutive day this Tuesday, breaking through the key support levels.

The latest leg down in the spot could be associated with the renewed weakness in the US dollar across the board. The greenback tracks the pullback in the Treasury yields, as investors turn to repositioning ahead of Fed Chair Jerome Powell’s testimony due later on Tuesday and Wednesday’s US inflation data.

Additionally, a minor slowdown in the new coronavirus infections in India supports the local currency, exerting further bearish pressure on the pair. Meanwhile, the ongoing upbeat momentum in oil prices, courtesy of the geopolitical tensions in Kazakhstan, fails to temper the underlying bullish tone around the Indian rupee.  

At the time of writing, the spot is trading close to 74.00, swinging back from four-month lows of 73.83 reached in the last hours.

The bearish outlook got reaffirmed after the pair gave a weekly closing below the critical 200-Daily Moving Average (DMA) at 74.29 on Friday.

The latest decline found additional legs on Monday’s closing below the rising trendline support at 74.13.

Selling resurgence could see a fresh downswing towards the September 28 lows of 73.74, below which the 73.50 support area could be tested.

USD/INR: Daily chart

The 14-day Relative Strength Index (RSI) is lying within the oversold region, pointing to a potential rebound in the spot.

Any retracement will retest the rising trendline support now resistance at 74.13, above which 200-DMA could test the bearish commitments.

Acceptance above the latter will initiate a fresh recovery rally towards the 100-DMA at 74.54.

USD/INR: Additional levels


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