New Lows In Store For The Rupee?

JC Parets
June 21, 2018

Over the last two months the Rupee has rallied against several of the most widely traded currencies in the world, including the US Dollar, Euro, British Pound, Yen, and Australian Dollar. With that said, the Rupee's rally versus the US Dollar was short lived and the pair is now back toward 2.5-year lows, suggesting it remains vulnerable and that further weakness may be ahead.

Below is a daily chart of the INR/USD pair showing its mid-May rally back toward former support turned resistance near 0.0152, where prices were quickly rejected and pushed back to its 2.5-year lows near 0.014510. Of all the major currencies mentioned above, the Rupee remains weakest against the US Dollar and the more times this support level is tested, the more likely it is we see a break to the downside.

Click on chart to enlarge view.

If prices close below 0.014510, that would confirm a breakdown and suggest that we want to be short the Rupee against the US Dollar and taking profits nearly 5.5% lower at 0.013703. Our risk is very well-defined and the reward/risk will be ridiculously skewed in favor of the bears if/when we see that break of support.

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