USD/INR: Bears Resisting Rupee’s Decline

Hourly Chart
USD/INR Hourly" title="USD/INR Hourly" height="566" width="895">
Has the rupee turned the corner? USD/INR has been rising continuously ever since the weekly low was forged on Monday, with sharp rallies seen around 11am SGT (10pm EST) for the past 3 days. Prices did rally similarly today at 11 am SGT but the magnitude is much lower than before, with the rally capped by the 61.6 ceiling which was the topside of the consolidation zone seen on the 5th and 6th December. Currently, price has found support via the rising Channel Top around 61.4 which also happens to be the confluence for the aforementioned consolidation zone's floor.

Stochastic readings suggest that prices may be able to break into the rising Channel, but a direct move towards the Channel Bottom is less likely considering that the Stoch curve is below 50.0 and most likely will be within the Oversold region when price hits yesterday's consolidation region, between 61.15 - 61.25. Nonetheless, as long as the price stays below the Channel Top, the Channel Bottom will remain a viable target moving forward.

Daily Chart
USD/INR Daily" title="USD/INR Daily" height="566" width="895">
The Daily Chart also favors bearish movements with the descending trendline providing overhead resistance. A bullish cycle is in play currently, but the Stoch curve may still reverse around the "resistance" level, around 36.8. Should the descending trendline hold, the bearish target would be the 60.5 support which kept prices afloat back in early October and early August.

It should be noted that recent declines in the USD/INR were contributed to by the fall in Indian stock prices, with the Sensex heading lower since Monday - the start of current USD/INR rally. Hence, in order for continued bearish movement in USD/INR, we should see the Sensex reversing its current decline, without which it would be hard for a long-term sustained strengthening of the INR, especially given that economic fundamentals in India continue to remain weak.

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