Dolllar moved in line with expectation where we had mentioned “….. The pullback seen in RSI to the neutral zone helped the momentum revive and once again head towards the 97.80 zone. “. The steady rise in the dollar has been quite surprising as concerns over prospects for the US economy and interest rates seems to be overlooked. The optimism triggered by a pause in the Fed rate hike helped the DX rally . Further , softening of the trade war outcome in the US-China appears somewhat mitigated as of late. Despite Payrolls were a fiasco when comes to job creation, the lower jobless rate and auspicious prints from wage inflation kept the upbeat sentiment almost intact around the buck. Also contributing to the rise in DX has been the performance of the currency around the globe especially the emerging markets.
Moving to the higher timeframe charts we continue to witness strong build up in the prices as they once again are trying to the breach a crucial zone around 97.80 mark . However we note that they are once again faltering at those levels. The need of the hour is some support from the momentum indicators which however seems to be contrary. The declining trend seen in the Relative Strength Index (RSI) suggests that support continues to be feeble , that could drag the prices lower towards the trendline supports around 96 which can once again ignite some bullish trends. The broad channel pitchfork drawn across the last few months clearly highlights some uptrend. With persistence of the trend to push higher levels around 98.50 to 99 in the event of some positive news trigger from Trump administration. Dollar Index is set for ranging action now as there is still a lack of clarity on how the trends would proceed ahead.
Way Forward: Trends are continuing to suggest more bullish scenario for the INR and the potential decline has suggested a range from 68.50 to 71 for the near term. DX on the other hand has hit strong resistances and with lack of momentum could head lower. Looking at the DX moves its quite certain that the market is factoring some more strengthening and hence one should look for hedging against the INR towards levels mentioned for the near term.