Key Points:
This is a follow up article to: Indian rupee set to strengthen as confidence in Fed rate cuts grows
The Indian rupee (Symbol: USDINR) is expected to stabilise marking its best day in almost two months, as the U.S. dollar experienced a broad decline. The U.S. dollar index (Symbol: USDX), which measures the greenback against a basket of major currencies, remains near its lowest level this year, adding pressure on the dollar.
Picture: USDINR runs flat as the U.S. dollar declines, as observed on the VT Markets app.
This recent decline in the dollar lacks a clear trigger, which raises concerns about the sustainability of the greenback’s weakness. This unmotivated dollar sell-off could suggest that market participants are beginning to unwind their long dollar positions against the rupee, providing some relief to the Indian currency.
Despite this, market participants are sceptical about the ability of the rupee to sustain a significant rally from current levels. The broader trend suggests that the rupee could continue to face downward pressure, especially as importers are expected to use any strength in the rupee to hedge their dollar exposures. This hedging activity could limit its upside potential in the near term.
Related content: Understanding support and resistance in trading
The focus now shifts to the upcoming comments from Federal Reserve Chair Jerome Powell, which could provide further direction for the dollar and, by extension, the rupee. The market is also closely monitoring the Reserve Bank of India’s actions as it continues to defend the 84-level, a key psychological threshold for the USDINR pair.
The recent dollar weakness could offer a brief window for rupee gains, but the broader market sentiment suggests caution. Traders should be mindful of potential volatility surrounding Federal Reserve Chair Jerome Powell’s comments and any shifts in the RBI’s intervention strategy. Importers’ hedging activities are likely to create resistance to any significant rupee appreciation, making it crucial for traders to stay nimble and closely monitor market developments.
Education
Company
FAQ
Promotion
Risk Warning: Trading CFDs carries a high level of risk and may not be suitable for all investors. Leverage in CFD trading can magnify gains and losses, potentially exceeding your original capital. It’s crucial to fully understand and acknowledge the associated risks before trading CFDs. Consider your financial situation, investment goals, and risk tolerance before making trading decisions. Past performance is not indicative of future results. Refer to our legal documents for a comprehensive understanding of CFD trading risks.
The information on this website is general and doesn’t account for your individual goals, financial situation, or needs. VT Markets cannot be held liable for the relevance, accuracy, timeliness, or completeness of any website information.
Our services and information on this website are not provided to residents of certain countries, including the United States, Singapore, Russia, and jurisdictions listed on the FATF and global sanctions lists. They are not intended for distribution or use in any location where such distribution or use would contravene local law or regulation.
VT Markets is a brand name with multiple entities authorised and registered in various jurisdictions.
· VT Global Pty Ltd is authorised and regulated by the Australian Securities & Investments Commission (ASIC) under licence number 516246.
· VT Global is not an issuer or market maker of derivatives and is only allowed to provide services to wholesale clients.
· VT Markets (Pty) Ltd is an authorised Financial Service Provider (FSP) registered and regulated by the Financial Sector Conduct Authority (FSCA) of South Africa under license number 50865.
· VT Markets Limited is an investment dealer authorised and regulated by the Mauritius Financial Services Commission (FSC) under license number GB23202269.
· VTMarkets Ltd, registered in the Republic of Cyprus with registration number HE436466 and registered address at Archbishop Makarios III, 160, Floor 1, 3026, Limassol, Cyprus.
Copyright © 2024 VT Markets.