U.S. DOLLAR/INDIAN RUPEE

Emerging market currencies had a relief rally over the past month. U.S. dollar weakened against most of the emerging market currencies with the expectation of a possible delay on FED rate hike. Counter-trend moves in the emerging market currencies might be over and we can see another phase of weakness. An important EM cross-rate is the U.S.Dollar/Indian Rupee. Once again the cross-rate pulled back to its 2 year-long trend line support. Both the 2 year-long trend line and the 100-day moving average form support between 64.50 and 64.80. Given the oversold condition on MACD, we can expect a possible rebound from the long-term support area resulting in Indian Rupee weakness.

In the case of a breakdown below 64.50 levels we will expect Rupee to gain strength and possibly reverse the 2 year-long trend.