The first few trading days of July have produced a bullish trend for the USD/IDR and it has tested resistance not treaded since early June. In trading yesterday the Indonesian Rupiah lost further value to the US Dollar and touched the 14550.0 level. This morning has produced a reversal as the USD/IDR has declined and is within the vicinity of 14365.0.
A dynamic mix of trading variables is creating an intense atmosphere for the USD/IDR. Risk appetite has flourished the past few trading sessions globally, but Indonesia has also been hit with coronavirus statistics which are intensifying and creating more concerns about its domestic economy. In the whirlwind of this storm, the USD/IDR continued a bullish trend, which did not correlate with many other forex pairs. In addition, the US Dollar lost value against many major currencies in the past few days.
To prove the USD/IDR has traded behind the curve, the forex pair has actually reversed and seen selling emerge this morning and support began to get tested. This has occurred as risk appetite has actually taken a breather in many of the Asian markets and equity indices are experiencing what may be defined as profit-taking by financial institutions with some declines appearing within the broad marketplace. Also highlighting this slight short term aversion to risk early today is the shadow of US Future Markets displaying a small decline, but certainly, it must be pointed out that the major indices globally continue to experience exuberance.
So why hasn’t the USD/IDR joined the party and seen a bearish trend develop for a sustained period? Short term support for the USD/IDR is near the 14300.0 level and if this can be broken downwards a realistic target for traders may be the 14120.0 juncture below. However, it will depend on the amount of leverage being used by a speculator which helps them make their decision when to exit a trade. So a quicker exit strategy can be justified and profits accomplished with a closer take profit ratio like the 14250.0 level for sellers.
Current domestic issues in Indonesia have caused the Indonesian Rupiah to lose value the past few weeks, but if risk appetite proves that it is here to stay in the coming days globally, higher resistance junctures may prove an alluring limit area to seek reversals downward. The current price levels of the USD/IDR are susceptible to range trading, but interestingly the USD/IDR sell-off this morning may mean risk appetite will emerge and support levels may become vulnerable.
Indonesian Rupiah Short Term Outlook:
Current Resistance: 14550.0
Current Support: 14300.0
High Target: 14620.0
Low Target: 14120.0
