USD/INR forecast: signal as an ascending triangle forms

The USD/INR exchange rate continued its deep slumber after the latest US and Indian consumer inflation numbers. The pair was trading at 83.20, where it has been at in the past few months. This price is a few points below the all-time high of 83.41 and 3.45% above the lowest point this year.

The USD/INR pair was in the spotlight after the latest US and India CPI data. Numbers by the Bureau of Labor Statistics (BLS) showed that America’s inflation slipped from 0.6% in August to 0.4% in September even as the price of gas jumped sharply during the month.

US inflation rose by 3.7% on a YoY basis, higher than the median estimate of 3.6%. Core inflation, on the other hand, remained unchanged at 0.3% MoM and dropped to 4.1% on a YoY basis. The latter is an important number since it strips the most volatile products in the economy.

These numbers came a few hours after the Federal Reserve published minutes of the last meeting. The minutes showed that most officials supported pausing rate hikes and maintaining them at an elevated level for a while. Analysts expect the Fed will deliver another rate hike either in November or December.

The USD/INR pair also consolidated after the encouraging Indian inflation data. According to the country’s statistics agency, the headline inflation dropped from 6.83% in August to 5.02% in September. This decline was better than the median estimate of 5.50%. 

Another report revealed that India’s industrial production rose by 10.3% in August. This was a bigger increase than the expected 9.0%. Manufacturing output also rose from 5.0% in July to 9.3% in August.

These numbers mean that the Reserve Bank of India (RBI) is balancing the country’s recovery with lowering inflation.

The 4H chart shows that the USD to INR exchange rate has been in a narrow range in the past few weeks. It has found a strong resistance at 83.305, the highest point since September 15th. The pair has risen above the 50-period moving average.

It has also formed an ascending triangle pattern, which is usually a bullish sign. Therefore, the outlook for the pair is bullish. This view will be confirmed if the price moves above the resistance at 83.30. A move above this price will see it rise to an all-time high at 83.41.

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