The Dollar Falls Below 200DMA, Will It Sustain?

Comments Off Written on March 10th, 2014 by
Categories: ExchangeRates

The USDINR exchange rate went below Rs. 61 on Friday, which is a close below its 200 Day Moving Average, for the first time since Jun 2013.

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A 200DMA crossover will have to sustain. We have not seen a 5% move below the 200DMA since 2007. We have of course seen upto 20% differences with the 200DMA on the upside.

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What’s next? I see no clear picture emerging till elections. However the impact of the US taper is only starting now - and if China continues to contract, we will see the rupee lesser and lesser in demand.A bad election result with no clear majority will worsen the picture.

Positives are of course that things will change after the elections. And the technical pattern shows strong support and a “descending triangle” where a breakdown from here is the potential move. (A breakdown in the USDINR means a stronger rupee and a weaker dollar).

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Since I’ve given you both positives and negatives, I’m going to sit the fence on this one. Let’s decide a trend once it goes below Rs. 60 or crosses 63.

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The man behind Capital Mind. Deepak is a co-founder at MarketVision, a financial knowledge company. Deepak also provides data research and consulting services, and now lives in Bangalore. Connect with him at deepakshenoy@capitalmind.in.