Indian rupee is likely to depreciate in the coming week
"I think the US fiscal stimulus package already considered by the investor in last week and now once announcement come, it could turn treated as 'Buy on rumor and sell on News' event and this would be the kind of news that could trigger bottom reversal in the currency and recent price declines have formed positive RSI divergence and this is a signal reserving the trend," says Khsitij Purohit, product manager Currency & Commodity, CapitalVia.
The US Dollar trading both side against a basket of currencies after the Federal Reserve disappointed investors for purchasing longer-dated bonds. Also Emerging market is witnessing selling pressure on the fear of recent rise in the covid cases, however recent IMF showing India as double-digit growth country for FY 22-23. FPI invested around Rs 4,500 crore in Indian equities in the current month so far because of their better quarter earnings, they are buying in selected blue chips, IT and banking stocks in Indian equity market.
The main trend is down according to the daily swing chart however the short-term trend will change above 73.20 on closing basis. The minor trend is also down before the union budget as profit booking scene in Indian equity and also dovish announcement by US central bank.
US 10-year yield hover above 1.04% last week of the day, Investors are moving funds into the safe-haven US Dollar, Major economic event is waiting for next week along with domestic union budget. RBI weekly data says Indian Forex reserve is decreased bit and came down to USD 584.40 billion, RBI remains a major USD buyer near 72.80/73.00 on spot and short was recovered by the institutional investor near this level. Technically, USDINR pair closed firm against the US Dollar taking cue from recent weak economic activity and bullish dollar index. USDINR spot is trading near psycological level of 73.00 preceding 21-day SMA is currently around 73.10 which is the resistance for closing basis and closing above this level will take price towards 73.45 levels. wherein support of the pair is at 72.80 – 72.60 levels and from this level banks are buying the greenback.