The USD/INR has kept its upward momentum intact the past month of trading. After achieving all-time vales in April, some traders may have believed the Forex pair had been overbought and that the USD would give back some of its value against the Indian Rupee; this did not happen.
Instead the past few weeks have seen new highs attained by the USD/INR. Yes, the pair has reversed slightly from its highs of about 77.9000 which were hit on the 16th and 20th of May, but the current value as of this writing near 77.6060 is still a relatively short distance from these upper tier ratios.
Speculators who dare to enter the USD/INR with positions need to understand that a complex puzzle needs to be solved. The U.S Federal Reserve will conduct another interest rate meeting on the 14th and 15th of June, and it is nearly certain another hike of 0.50% will be added to the current borrowing rate. While this number has likely been traded into the USD/INR already by financial institutions, what is unknown is what the U.S central bank will say their outlook for more rate hikes will be this coming summer in July and August.
Technical traders may not want to take any of the above into consideration regarding the Federal Reserve, but it may be wise to at least know when to expect the volatility that the decision making and pronouncements will inflict on the USD/INR. While moving around near all-time highs the USD/INR may appear overbought and long term this may prove to be the case. However, day traders who want to hold onto a position for merely a day or two – or even only a few hours, do not have the luxury or the need to consider what the price of the USD/INR will be this time next year.
Momentum has been upwards and the prevailing question for speculators looking for short term wagers is when a reversal lower will develop, or if the upwards climb is simply going to continue? While it may have been tempting to say the 77.0000 level would prove to be a stop gap area for the USD/INR in May and that a reversal lower would occur, this has not proven to be correct. The 78.0000 juncture is clearly within shouting distance and taking into consideration the volatility that is bound to occur in the second week of June, due to the U.S Federal Reserve lurking in the shadows, traders need to plan for more volatility.
USD/INR Outlook for June 2022
Speculative price range for USD/INR is 76.7300 to 78.3500
Short term speculators should expect the current price range of the USD/INR to continue to produce fireworks. However the fireworks may only be demonstrated with sudden bursts of energy after further consolidation has taken place. The past week of trading has produced a rather tight range and this may prevail as institutional traders become more cautious in the coming week. If the USD/INR stumbles lower to the 77.4500 realm in the near term, it might prove to be a solid opportunity to look for some upside with buying wagers. Speculators should expect choppy conditions to linger the next two weeks.
The USD/INR is likely to traverse its current range, but if a stronger buying surge seeps into the Forex market for the USD, the forex pair could suddenly start to challenge the 78.0000 realm in June. While the USD/INR at a price of 78.1000 may seem too high, the Forex market doesn’t care about an individual’s ‘feelings’. A higher move around these ratios could be the result of speculative bets by large institutions, which think the U.S central bank is going to remain stubborn and say they want to raise interest rates not only in June, but in the summer also.
