After depreciating by nearly 2.36% in 2020, the spotlight is back on how will the USDINR will perform in the new year. The optimism over vaccine and faster global recovery is keeping the emerging currencies including rupee on a bullish note.
The post covid recovery with the gradual rollout of vaccines, ample liquidity provided by central banks, and fiscal support has been priced in. But there still exits apprehension about the ongoing coronavirus and US political scene. The media has anointed Joe Biden the US President, but the reality is that there is a lot left to play out in the fallout from the US Election. On Wednesday, at 1 pm GMT, we will see Congress meet to formalise the votes from the Electoral Colleges. Also, we have the Georgia run-off elections going. The Republicans need to hold onto those two seats to remain in control of the Senate. A win by Democrats will be negative for the USDINR pair because it will signal more stimulus in the US.
While, as seen in the daily chart, the trend in USDINR spot has been on a bearish note. It remains above the vital support level at 72.75. It has also formed a descending channel that is shown in blue. Therefore, the pair will likely continue falling as bears will aim for the downside side of the channel at 72.50. This trade will be invalidated if the price bounces towards 73.50 and then at 73.75-74.0.
