- USD/INR's break below 100-day SMA suggests scope for continued gains in the rupee.
- A pullback in stocks from record highs could yield temporary dollar strength.
The USD/INR pair closed below the 100-day Simple Moving Average (SMA) of 74.15 on Wednesday, paving the way for stronger gains in the Indian rupee in the near-term.
The Indian currency has risen from 74.75 to 74.11 per US dollar in the past few days amid the risk-on rally in the domestic and global stock markets. Risk assets, in general, have been bid this month on expectations that potential coronavirus vaccines would power a swift global economic recovery in 2021.
With the latest reports stating that Pfizer-BioNTech vaccine deliveries could start before Christmas, the path of least resistance for both stocks and the Indian rupee remains on the higher side. That said, at record highs, stocks look vulnerable to a technical pullback, which would put a bid under the greenback.
The dollar index, which gauges the greenback's value against majors, is trading in the green at press time, following the overnight losses on Wall Street. Additional bearish pressure for the rupee may stem from a potential breakout in Brent oil prices above the recent high of $45.30. That possibility cannot be ruled out as the OPEC+ is reportedly planning to delay the output boost planned to take effect in January.
Technical levels
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