USD/INR looks for clear direction below six-week-old resistance trend line
- USD/INR stays above 50-DMA while also holding the pullback from near-term key resistance line.
- US-China trade optimism, stronger US bond yields please buyers while a lack of major catalysts and recently downbeat US data cap the rise.
- Year-end sparse trading conditions limit the market performance.
USD/INR seesaws around 71.30 ahead of the European session on Friday. The pair have recently been benefited from the comparative strength of the US treasury yields to the Indian ones, not to forget doubts over the Indian economy and political pessimism. In doing so, the quote stays below a downward sloping trend line since mid-October.
The recent uptick in the US treasury yields could be attributed to the positive signals concerning the US-China phase-one trade deal. Markets might also have concentrated on broad positive data while ignoring the latest soft prints of initial jobless claims and MBA Mortgage Applications.
On the other hand, major global rating houses have already predicted a softer growth figure for the Indian economy while the latest political rout in the nation has deteriorated the scene further towards hurting the Indian Rupee (INR). This could also be compared to the Business Standard’s news signaling a Five-fold increase in dollar bonds in 2019.
Market’s risk tone has been positive considering the nearness of the US-China trade deal, which in turn helps the Asian stocks and treasury yields to stay mildly positive despite no major data/events.
While figures for the Indian Forex Reserve till December 16, $454.49 B prior, are the only ones to decorate the economic calendar, investors will look for qualitative catalysts for fresh direction.
Overall, a lack of major market activity during the year-end holiday mood at the developed nations will hamper the pair’s movement before 2020 settles in.
Technical Analysis
A daily closing beyond 71.52 resistance line could trigger fresh run-up towards the monthly high near 72.00. On the downside, the quote’s daily closing below 50-Day Simple Moving Average (DMA) level of 71.24 can recall 71.00 on the chart.