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Indian Rupee, Nifty 50 Forecast: USD/INR Breakout as Volatility Spikes?

Indian Rupee, Nifty 50 Forecast: USD/INR Breakout as Volatility Spikes?

Daniel Dubrovsky, Strategist

Indian Rupee, USD/INR, Nifty 50, Coronavirus, Technical Analysis - Talking Points

  • US Dollar gaining as global stock market volatility rises
  • Indian Rupee at risk, USD/INR eyeing upside breakout?
  • Nifty 50 has held ground for now, could it capitulate?
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The Indian Rupee is losing ground to the haven-linked US Dollar in recent days as stock market volatility wreaks havoc around the world. The Nifty 50 could be at risk. Rising coronavirus cases globally have led to lockdowns being reimposed in parts of Europe, with France being a recent case. Hopes of a US fiscal package ahead of the presidential election faded on a stalemate in talks, pouring cold water on recovery hopes.

Indian Rupee Technical Analysis

The US Dollar may be readying to extend gains against the Indian Rupee from a technical view. That is because USD/INR took out multiple key resistance points. The pair has spent most of its time since late August consolidating between 72.76 and 74.04. Now, the latter has been taken out. Granted, confirmation is lacking at this point. However, the push above the 50-day Simple Moving Average (SMA) is more convincing.

The Indian Rupee has also taken out the falling trendline from June, but I would like to see an additional upside close to further confirm the breakout. Recent price action has exposed the 74.528 inflection zone. If the pair pushes beyond this point, it would expose a series of lower highs from July and August. Otherwise, downtrend resumption entails falling under the August low, exposing highs from 2019.

USD/INR Daily Chart

Indian Rupee, Nifty 50 Forecast: USD/INR Breakout as Volatility Spikes?

USD/INR Chart Created in TradingView

Nifty 50 Technical Analysis

The Nifty 50, India’s benchmark stock index, has maintained its ground despite weakness in global equities. Having said that, the push higher from late September paused as resistance was established at 12025. Immediate support sits below at 11661. Taking out this prices subsequently exposes the 50-day SMA. A drop through it could open the door to testing the 10790 – 10882 support zone.

Getting there entails taking out inflection points at 11317 followed by 11111. Negative RSI divergence since the middle of October underscored fading upside momentum which can at times precede a turn lower. In the event prices retest resistance ahead, keep a close eye on January highs. Taking out the all-time high at 12430 exposes the midpoint of the Fibonacci extension at 12931.

Nifty 50 Daily Chart

Indian Rupee, Nifty 50 Forecast: USD/INR Breakout as Volatility Spikes?

Nifty 50 Chart Created in TradingView

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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