Little has changed since new RBI governor Rajan took over, but that did not stop to Indian Rupee assess, with prices currently violating below the up key on the Top channel (see weekly chart below) and will end under if we continue to remain around current levels. The reason for the increase in strength is due to market expectations that Rajan will continue to raise rates in the near future. RBI surprised the market last Friday with an increase in repo rate when everyone expected a lower marginal rate permanent mechanism (MSF) to improve liquidity. In addition, there are reports suggesting that RBI may use consumer price inflation as the main gauge of inflation going forward. This in itself does not mean much, but given the hawkishness of Rajan, seems to be a movement to justify further rate hikes as inflation figures for consumption were constantly in motion while higher the traditional gauge of inflation (using large numbers) are down slightly due to the economic downturn.
This is actually a good thing, as RBI tackles head on inflation monster. However, with market prices higher rates, the economy will further lower reservoir. In response to this, Rajan chose to inject 1.5 Trillion Rupiah in the financial system every day, and promised to participate in open market operations to ensure adequate liquidity. Will it be enough? Nobody really knows right now. Moreover, all these are just paper talk and there is very little action is happening right now. But at least for now, it seems the market is to believe in Rajan and his plan to save both Rupee and the economy.
Time Table
This is clearly via price action where prices have declined to levels last Friday before the curious increase in RBI rate that pushed lower Rupee. The feeling has now returned to that trust and allowing USD / INR to the lower ongoing negotiations, even if USD is actually trading higher, beating all major currencies except CHF. USD should weaken again, we could potentially see even more rapid decline in USD / INR can take us below the (low after announcement FOMC) 61.30.
From a purely technical perspective, prices have pushed out of the descending channel top, coinciding with stochastic readings push higher with an upward cycle signal. However, it is unlikely that prices will be able to violate the RBI rate level consolidation hiking 62.25 readings station will most likely be in the overbought region when this happens.
Weekly Chart
price is also downward through the weekly chart, especially if we start Monday with a bearish gap fast. However, it is likely that we will find support through the consolidation range between 59.0 to 61.25 as it is likely that Stoch levels will most likely hit oversold when this happens. In addition, technical withdrawal should be expected after such a strong and continuous downward trend of 69.0. As the rebound / pullback does not negotiate over the English Channel on the rise, the likelihood of progression to remain Bottom Channel
Links :.
NZD / USD Technical - remain under 0.83
Rhyme And Reason Not A Concern EURO Dollar Gold
or technicals - Higher on concerns the US Budget
This article is only for general information purposes. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or its subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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Read More : USD/INR Technicals – Strong Bearish Potential With Rupee Gaining Back Strength
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