Will USDINR Come Under Pressure?

  • by THO
  • 9 months ago
  • news
  • 1

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The spot has edged slightly higher this past week and is afloat with the DXY Index eking out a modest 0.2% gain. The breached to a two-week high tracking the uptick in US treasury yields. There are speculations that the Federal Reserve will put the onus on Biden to support economic recovery as Democrats control the government and the Fed wouldn’t need to increase the pace of the $120 billion bond-buying programmes. However, by the end of this year with further development over the vaccine, we may see the start of Fed’s ‘taper tantrum’.

Biden is considering a new stimulus punch to juice up the economy, first by providing $1400 payments to help suffering Americans and then unleashing a supermassive $3 trillion infrastructure package. This larger fiscal stimulus will offer much-needed support to recover from the coronavirus and could put pressure on the dollar. However, stricter lockdowns in different parts of the world remain an upside risk for USDINR spot amid the new more-contagious strain of Covid-19.

 As given in the daily chart, USDINR spot opened the week higher right close to the median of Bollinger Band. The upside in USDINR spot looks limited until 73.55/73.65 due to 61.8% Fibonacci Retracement level. Also, the currency pair has to break the descending channel pattern and consistently trade about the immediate resistance to breach 73.75-74 zone. Meanwhile, strong support is located at 73.25 and then at 73.0 and consistent trading below 73.0 only we can see a dip towards 72.75.
Analysis

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