The Indian Rupee (INR) extends its advance against the US Dollar (USD) on Wednesday, with early trends in United States (US) midterm elections pointing to the victory of Democrats in both the House and the Senate.
In the opening trade, the USD/INR pair is down 0.1% to near 94.60 as the US Dollar underperforms. As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.4% down to near 101.48. The DXY is still sharply lower even after recovering significant intraday losses after sliding to near 101.25.
What is the current status of US midterm elections?
According to the BBC, Democrats have won 50 majority seats in Senate, while counting is still going on. In the House, 294 out of 435 seats have been counted and Democrats are leading with 184 seats. For a clear majority, any party needs to win 218 seats
The scenario of Democrats winning both the House of Representatives and the Senate is expected to have a significant impact on the US Dollar.
ING warned earlier that “fears of tougher regulation could weigh on Artificial Intelligence (AI) stocks (we’ve recently seen how that can hit the greenback), while markets could price in greater risks of decision-making gridlock around issues such as government funding and the debt ceiling.”
However, ING ruled out fears of a structural directional shift in the Dollar, explaining that the greenback “continues to respond predominantly to the Fed story, which shouldn’t face an immediate and direct impact from the midterm result”.
Key US economic releases
This week, investors will pay close attention to key US economic releases, notably Nonfarm Payrolls (NFP) data for October, which will be released on Friday. The NFP data will likely influence Federal Reserve’s (Fed) interest rate expectations significantly.
Ahead of the official US employment data release, financial markets will focus on the US ADP Employment Change data for October, which will be published later in the day at 13:15 GMT. The data is expected to show that the private sector created 69K fresh jobs lower than 90K in September.
USD/INR Technical Analysis
In the daily chart, USD/INR trades at 94.7405, maintaining a bearish near-term bias as spot holds beneath the 20-day exponential moving average (EMA) at 95.1559. The pair has retreated from recent highs and remains capped by this dynamic resistance, while the Relative Strength Index (RSI) around 37 suggests lingering downside pressure, though not yet in oversold territory.
On the topside, immediate resistance is seen at the 20-day EMA near 95.16, and a daily close above this barrier would be needed to ease the current downside bias and allow for a recovery phase. With no clear structural supports indicated by the current dataset, traders may look to the recent swing lows and psychological handles below the market as potential demand areas, while the prevailing configuration continues to favor sellers as long as price trades under the 20-day EMA.
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