- The US dollar has rallied again on Friday against the Indian rupee, as we are now testing the ₹83.50 level on Friday.
- Ultimately, this is a market that had sold off somewhat strongly during the previous week, only to see it turn around and rip to the upside yet again this past week.
- The 50-Day EMA is flat at the moment, and we have blown through it like it was an even there.
Underneath, we have the ₹83.25 level offering potential support, so I think any pullback at this point in time will have to look at that level very closely. If we were to break down below there, then the market would probably have to test the 200-Day EMA which is closer to the ₹83 level, which is an area that’s been important multiple times.
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Keep in mind that this is not a free-floating currency pair. Quite frankly, the Indian central bank has a long history of interfering in freely exchanged currencies, and that the US dollar course is a major benchmark against the Indian rupee, so they don’t hesitate to manipulate the market when they want to. That being said, this is a market that tends to move very slowly so you need to be patient. Short-term pullbacks to look like they would offer buying opportunities, but that doesn’t necessarily mean that you would realize gains very quickly.
A breakdown
If we were to break down below the 200-Day EMA, it could see the Indian rupee strengthen to the 82.70 level, which is an area that previously had been support as well. While I’m not necessarily looking for this to happen, if we see some type of major selloff in the US dollar, it could be beneficial for the Indian rupee. However, it’s probably worth noting that you need to see more of a “risk on” attitude around the world to see the US dollar fall apart against an emerging market like India. While it’s not impossible, it doesn’t look as likely at the moment after we have seen this most recent move.
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