With the US-China phase 1 trade deal already digested in price, the one reason which could have led the dollar index to break 96 (200 WMA) has proved to be insufficient. We should continue to see USD index trade in a range of 96.65 and 99 for the foreseeable future (CMP 97.31). On the other hand, with US elections behind us, what lies ahead is again Brexit related uncertainty which should also weigh on the EURO making a weekly close above 1.1158 unlikely (CMP 1.1133).
USDINR has not been able to break lower in spite of the US-China deal plus large inflows. Therefore, now the focus shifts on the weaker macros helped by a possible move up to 99 levels on the dollar index. To add to this Brent has moved up by 7% in the last fortnight which will also help an up move in USDINR. Last week’s close of 70.81 should act as a good stop for long USDINR positions. A close above 71.15 should pave the way for 71.70. CMP 71.09, Range 70.95-71.15.
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