Ahead of Fed meeting US dollar to remain stable

The Fed is expected to hike by 25 basis points first time since 2018, but before the announcement dollar is quite stable. Read on to find out more.

On Wednesday, the Indian rupee opened higher amid the risk assets being on the forefront, stability in the dollar and crude oil prices down. However, it moved near its four-day low.

As the Fed is likely to hike 25 basis points, the focus would be on their statements and outcomes of the meeting slated on Wednesday. If the Fed hikes the interest rates, then this would be the first time since 2018, that the US would witness an increase in interest rates due to high inflation.

On Wednesday, the spot USD/INR pair tried to inch upwards but failed to do so as it witnessed selling pressure near 76.29 levels. Speaking technically, support and resistance of the USD/INR pair is placed at 76.02 and 76.33, respectively.

Ahead of the expected 25 basis point rate hike, dollar remains stable around 99 level on Wednesday. On the other hand, the US data depicted that the Producer Price Inflation stood at 10%, emphasizing inflationary pressures.

Although the recent losses were trimmed for the West Texas Intermediate crude, the price remained below 100 dollars a barrel. Said that, there are signs of more supply amid the expectation of Iran’s nuclear talks to resume. However, the covid lockdowns in China might curb the demand.

Even though Russia started the process of paying interest on dollar bonds worth USD 117 million on Wednesday, there is a high possibility of default as the sanctions and Russian decrees might prevent dollar settlements.

Post the recent rally, the March futures of USD/INR pair formed another Doji candlestick pattern on daily chart which shows indecision among bulls and bears. This further suggested the consolidation to continue.

Looking at the moving averages, the pair has been trading above short-term moving averages. Speaking about the indicators, the Relative Strength Index is placed at 63 and seems to be flattening signifying dull momentum.