Currency Update: FED meeting will decide the next move in USD/INR pair

The USD/INR pair will strengthen as crude oil prices climb and the dollar index maintains its current pace. Continue reading to find out more.

Ahead of the Federal Open Market Committee meeting next week, Asian currencies may drop against the US dollar as a result of risk-off sentiment fuelled by losses in regional equities markets and US stock futures. Returning to the domestic front, corporate dollar bond inflows may assist USD/INR to begin slightly lower, but as trading develops, higher crude oil prices and a stronger dollar index will contribute to the pair's gain. 

After reaching a high of 77.42 in March 2020, the USD/INR continued to trade in a downward sloping channel. However, it appeared like it gave a breakout from this channel in December 2021 but later proved out to be a phoney breakout. Furthermore, it began to fall, reaching a low of 73.69 in the second week of January 2021, and retraced back from its 61.8 per cent Fibonacci level. This week it appears to be positive, and jumped from last week's low to a high of 74.68, exceeding its 50 per cent Fibonacci level. Currently, it is consolidating around the same level for the last two days. 

USD/INR developed a Doji candlestick pattern yesterday, signalling indecision. In terms of trend, it is trading below its nine-day, 20-day, and 50-day exponential moving averages (EMA). The pair's key resistance is around 74.88, which is also its 38.2 per cent Fibonacci level. 

The Relative Strength Index (RSI), is rising and is now at 47. The MACD has been positioned below the zero line but has delivered a positive crossover, implying a short-term trend reversal. The pair is now taking support at 50 per cent and resistance around 38.2 per cent Fibonacci retracement. The USD/INR pair is likely to trade in the 74.88 to 74.39 range.