RBI departed from its regime of rate cut that it has been introducing through 2019 to end the year on a somber note. While efforts to revive the economy are being initiated the INR seems to have become listless as it is unable to breakout of a ranging action thus triggering possibilities of some continued upward traction. The range bound movement identified last week has been pretty much the scenario over the last few days despite witnessing events that could have triggered some sharp moves. Primarily reason has been the volatile global cues that are emitting mixed signal leading to a consolidation for the INR. Since last issue the INR has been in a range and the election results did nothing much to bring about some strengthening. Volatile scenario shall continue to persist as the news triggers continue to fuel some intraday movements for the INR.
Higher timeframe charts suggest that the last two weeks we have received some sharp sell off at the confluence of the descending trendline resistance. Here, we also note that the median line of the rising Pitchfork has halted the recovery and after spending more than 4 weeks in an attempt to move higher the USDINR has now given up. While global cues continue to stoke possibility of dollar strengthening the INR trajectory remains muted, With the momentum now reverting back to the neutral zone we could be experiencing some sedate moves at this time of the year. With lack of clarity and events behind us we should be looking at some ranging action to emerge on the currency pair.
As INR continues to show inclination to range until it is able to clear the immediate hurdle at 72 on the upside and 70 on the downside we shall be looking at the possibility of a consolidation phase in INR in the next few days . Some decisive moves can be seen only if the range is exceeded on either side. While INR attempts to strengthen on the back of some renewed optimism on the upbeat China inflation data , fears of the trade war between the United States (US) and China keep the optimists under check. Looking at the way the currency pair is moving the lower bounds seems to have shifted towards 70 while the upside remains capped at 72.