USD/IDR Price Forecast: Falls toward moving averages near 17,800 ahead of BI decision

The USD/IDR exchange rate has been experiencing a decline for two consecutive days, currently trading near 17,820 during Asian trading hours on Wednesday. Technical indicators suggest that the pair is still within an ascending channel, displaying a bullish bias. Market participants are now eagerly awaiting the Bank Indonesia's interest rate decision, which is scheduled later in the day.

The USD/IDR pair maintains a mildly bullish outlook in the short term, as the price remains above both the nine- and 50-day Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) stands at 54.08, indicating a positive sentiment without reaching overbought levels. The elevated Federal Reserve Sentiment Index at 148.39 further supports the expectation of continued dollar strength.

USD/IDR traders may experience a rebound and potentially test the upper boundary of the ascending channel, around the 18,060 level, followed by a potential climb to the previous all-time high of 18,247, hit on June 8. Conversely, a break below the channel could trigger a decline towards the 17,804 and 17,800 EMAs, marking the lower boundary of the ascending channel.

Should this happen, the pair could slide to its four-month low of 17,476, recorded in September 9. OCBC analysts highlight Indonesia's fiscal prudence, with the January-August deficit remaining relatively contained at 0.93% of GDP. The government has also taken steps to maintain financial stability, pledging to keep at least IDR200tn of funds in state-owned banks until July 2027.

Finance Minister Suahasil Nazara has further assured markets that any future withdrawals would be communicated carefully to prevent disrupting financial stability, reinforcing expectations of policy continuity and careful fiscal management.