USD/INR: 50-day SMA question buyers seeking RBI’s rate cut

• RBI is expected to turn dove with a 0.25% rate cut and qualitative measures.
• 50-day SMA and near-term resistance-line limit the quote’s upside towards 100-day SMA.

Despite the Indian Rupee (INR) traders expecting the second rate cut by the RBI, the USD/INR pair refrains from crossing 50-day SMA as it seesaws near 69.41 during early Thursday.

Recent weakness of the US Dollar (USD) has played a little part in the quote’s latest recovery as a victory by the ruling Bhartiya Janta Party (BJP) pushed locales towards expecting further monetary easing.

However, bulls kept calm due to Indian holiday on Wednesday and monetary policy meeting by the Reserve Bank of Indian (RBI) up at 06:15 GMT.

Market consensus favors 25 basis points (bps) cut to the benchmark rates namely Repo and Reverse Repo to 5.75% and 5.50% respectively. Though, no change is expected to take place in 4% cash reserve ratio.

Speculations are also on a hike that other than rate cuts, the Indian central bank might also undertake some qualitative easing steps and could change its monetary policy stance to “accommodative” from “neutral” held since a rate cut in April.

Following the RBI release, US trade balance data and political plays surrounding the US-China and US-Mexico worries could keep entertaining market players.

Technical Analysis

Not only 50-day simple moving average (SMA) at 69.58 but a downward sloping trend-line since mid-May near 69.70 also hinders the pair’s path towards 100-day SMA level of 70.04.

On the downside, break of current month low surrounding 69.00 can push sellers towards April 11 bottom near 68.84 and then to 68.38/34 region comprising lows marked during late-March and early-April.