The ₹77 levels have been important in the past, and I think that is where we are heading.

The US dollar rallied a bit during the trading session on Thursday again to break above the ₹76.50 level. This is an area that previously has been a little bit of resistance, but in the bigger scheme of things is minor at best. When you look at the chart, we have been in an uptrend for quite some time, pulled back to the ₹75.50 level, and then shot higher again. Remember, this is a pair that typically grinds in one direction or the other and does tend to trend for very long periods.

The ₹77 levels have been important in the past, and I think that is where we are heading. This makes a lot of sense considering that the US dollar is strengthening against almost everything at the moment, and of course, the Indian rupee represents an emerging market economy. Right now, there are a lot of concerns about global growth slowing down, and the strengthening US dollar acts as a bit of a feedback loop because most emerging market debt is denominated in US dollars so therefore it creates quite a bit of problem for countries like India.

If we do see a continued strengthening of the US dollar against most other currencies, there is no reason to think that it cannot break above the ₹77 level rather handily. Keep in mind that the central bank in India is a little bit more active in setting a range, but right now I do not think they have a major issue with the rupee falling, mainly because it could be too expensive to fight it.

There are energy concerns, but it appears that India is finding some type of backdoor situation with the Russians, so that may not have the effect on India that it very well could have on other places like Europe. Nonetheless, if we start to see a lot of economic pain around the world, there is almost no chance India escapes it. Furthermore, investors tend to repatriate money when things get tough. Most of the money is going to come out of places like India and back into other places like Europe or the United States. The US dollar is considered to be a safe currency, and that might be the only thing people care about at this point.

I do believe that given enough time, we could go back to the ₹77 level.

The US dollar initially fell against the Indian rupee during the trading session on Thursday but found support near the ₹75.50 level as we have seen multiple days in a row. Ultimately, this is a market that has been in an uptrend previously but then pulled back to show signs of exhaustion. Now we are dancing around the same region for the last several days, which suggests that we are trying to build up a bit of a base for continuation.

It is worth noting that the 50 Day EMA is slicing right through the middle of the candlestick for the Thursday session, which ended up being a hammer. The ₹76 level is at the top of a hammer, and it is an area that has been difficult to break above recently. By breaking above there, it allows the US dollar to continue going higher, with an eye on the ₹76.25 level, and then the ₹76.50 level. The market continues to favor the greenback overall, although the pullback was somewhat significant.

With interest rates rising in the United States, that does put a bit of bullish pressure on the greenback, and you see that in multiple markets, not just this one. That being said, the market is likely to see a significant amount of noise overall, as the US dollar is not only seeing higher interest rates but it is also used as a safety instrument, as emerging market currencies are considered to be further out on the risk spectrum. That is especially true with the Indian rupee, which needs global growth to really get moving.

On the other side of the trade, if we were to break down below the hammer during the trading session on a daily close for Friday, then it could be a sign that we are going to go looking to the ₹75 area, which the 200 Day EMA is racing towards. Nonetheless, things look bullish at the moment, or at the very least that we are trying to build a bit of consolidation. Because of this, the market favors a breakout soon, and I certainly would be willing to jump on that breakout when it happens. This is especially true if it is to the upside. I do believe that given enough time, we could go back to the ₹77 level.