Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities
The Indian Rupee ended stronger for the week as risk appetite improved as concerns over the economic impact of the Omicron variant of the coronavirus eased.
Interbank selling the USD/INR pair, RBI's presence in the market, absence of importers and aggressive hedging by exporters in anticipation of quarter-end dollar inflows lent support this week.
Most regional and EM currencies appreciated against the U.S. Dollar this week and lent support.
Meanwhile, unwinding of long dollar positions and a recovery in local equities this week ahead of the Christmas holiday weekend also lent support.
In the overseas markets, the U.S. Dollar is on the way to end weaker against the basket of currencies as easing fears of fallout from the Omicron coronavirus variant supported higher-risk currencies.
However, ahead of the holidays and extended long weekend in the United States, most major currency pairs were stuck in narrow ranges.
The Euro and the Sterling rebounded this week, while the safe haven Yen was weak as investors exited safe haven assets.
Meanwhile, hot inflation drove investors to safe-haven assets.
The latest Headline PCE price index was up 0.61% month-over-month (MoM) and is up 5.73% year-over-year (YoY). Core PCE (YoY) is now at 4.68%, well above the Fed's 2% target rate.
Meanwhile, U.S. GDP increased at a 2.3% annualized rate, the Commerce Department data showed for the July-September quarter and was up from the 2.1% pace estimated last month but was still the slowest since the 2nd quarter of 2020 and weighed on the greenback.
Looking ahead, price action will be choppy, range bound and could witness very low volumes due to the holiday season.
A rise in Omicron cases globally could keep investors cautious and could move investors back to the safe haven appeal of the Greenback.
However, domestically, if exporters continue to remain active, more appreciation is possible.
On the calendar, only U.S. Consumer Confidence and Jobless Claims data will impact the international markets.
Domestically, fiscal deficit and current account data could move the market.
On the charts, the USDINR Spot pair on weekly chart has formed a long Bearish Candlestick which is a sign for Bearish Reversal and could witness a downside pressure up to 74.45-73.90 levels in the coming week. Resistance is at 75.15-75.56 levels.
The USDINR Spot pair could trade in a range of 74.45-75.60 levels in coming week.
In the overseas markets, the Dollar Index support zone is $95.34-$94.30 levels. Resistance zone is at $96.20-$96.62 levels.