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Yen Drawdown at Asian Crisis Levels Without A Crisis

• The Indian rupee is expected to open slightly lower following overnight strength in the greenback and risk-averse moods. The forward markets indicate spot USDINR could open around 79.90 andmay add gainsfollowing regional peers.

• On Tuesday, spot USDINR ended with a mere 1 paise loss to 79.84. The pair is expected to consolidate in the range of 80.10 to 79.60 in the short term but the bias/ trend remains bullish aslong as it trades above 78.70.

• Developed economies are taking a hit from the dollar’s appreciation to multidecade highs in ways that were once more familiar to their emerging market peers. The Fed’s trade-weighted dollar index versus advanced economies has soared 10% this year to the strongest since 2002, while the emerging-markets measure is up a more modest 3.7% and remains well below its peak from the 2020 pandemic.

• The Japanese currency at one stage weakened as much as 1.7% to 143.07 per dollar, a level unseen since 1998, extending its year-to-date decline to almost 20%. The yen chalked up its biggest one-day plunge in a month Tuesday as surging Treasury yields helped buoy the greenback against almost all of its major developed-market counterparts.

• Euro was down 0.42% at around 0.9888, having earlier swung from a gain of as much as 0.6% to a loss. Traders are looking ahead to the European Central Bank meeting on Thursday.

• The US service sector expanded in August at the fastest pace in four months amid a pickup in business activity. The continued growth makes it easier for the Fed to hike aggressively

Technical Observations:

• USDINR September futures formed a Doji Candlestick pattern indicating indecisiveness among traders.

• The pair has been oscillating around 13 and 21-day exponential moving averages suggesting consolidation in the near term.

• Long build-up has been seen with price rise and open interest.

• Momentum oscillator, Relative Strength Index of 14 days period flatten near breakeven line indicating lacklustre momentum.

• MACD also flatten slightly above the zero line indicating a sideway trend.

• USDINR September futures could trade within the range of 79.70 to 80.35 in the near term. The medium-term bias remains bullish as long as it trades above 79.70.

USDINR September Futures Daily Chart

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