- The USD/INR has continued to show a slight incremental decline technically.
- A February monthly chart shows the currency pair has been able to maintain a slight bearish tilt, and putting it into full perspective a three month chart also confirms downwards momentum.
- However speculators of the USD/INR who are looking for quick hitting results may not have noticed the declines in the USD/INR if they are only pursuing short-term wagers because of the daily fluctuations.
The rather tranquil price realm of the USD/INR accomplished in February has demonstrated the 82.8000 level as crucial support. Since touching a high of nearly 83.1190 on the 13th and 14th of this month, the USD/INR has battled lower. The 83.0500 was tested as resistance on the 15th and 16th, but having proven durable a selling trend was maintained. On the 22nd of February and earlier this week the USD/INR did challenge the 82.8000 price level but reversals higher were produced.
Intriguingly, bearish speculators will see the 82.8000 level was penetrated slightly lower, but pushed value upwards consistently – thus showing the level is seen as support. Depending on technical perspectives this could lead some to believe a lower price level will be tested and sustained, but may have others suspected this is a depth that will continue to foster upwards reversals.
Technical Insights and the Reserve Bank of India within the USD/INR
Before technical traders jump to major conclusions regarding the USD/INR they should acknowledge the Reserve Bank of India is playing a role in the price range of the currency pair. While this may actually be a good thing for speculators who are able to guess what price range the Reserve Bank of India is willing to allow, it is also dangerous because the central bank could decide to make a sudden change regarding comfortable value realms and create havoc for those wagering.
Two correlations need to be kept in mind regarding the value of the USD/INR. One is the outlook of the U.S Federal Reserve and the apparent belief that by June the Fed may begin to officially start to become more dovish. However, that is still an open question because of the mixed U.S economic data which is causing bedlam on occasion in the broad Forex markets due to inflation remaining stubborn. This Thursday an important inflation reading will come via the PCE Price Index, if this number is weaker than expected it could fuel the notion the USD is supposed to weaken against other major currencies.
But importantly, the second consideration in the USD/INR is the approaching national election in April and May which will take place in India. It is likely the Indian government would like to see the USD/INR remain serene over the next few months.
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USD/INR Range of 82.8000 and 82.9400 is Intriguing
- The tight range of the USD/INR over the past week and a half is interesting.
- Speculators who have the ability to wager on support and resistance levels technically may feel like this is an opportunity to take advantage of the give and take being created in the currency pair.
- There are no guarantees, but if the 82.8000 to 82.9400 levels continue to show an ability to be maintained, traders may be willing to sell the USD/INR if resistance near 82.9300 is tested.
- Traders must remember to use entry price orders to protect their ‘fills’ against the wide bids and asks that are practiced in the USD/INR.
USD/INR Outlook for March 2024
Speculative price range for USD/INR is 82.7310 to 83.0710
Having created the ‘belief’ in a rather tranquil price range within the USD/INR is a dangerous perspective for traders. Risk management needs to remain diligent, because all it takes is one decision from the Reserve Bank of India to change all dynamics. Surprising economic data from the U.S could change the direction of the USD/INR also and knock it out of the ‘known’ range it has been traversing.
While the USD may have the perception that it is supposed to be weaker over the mid-term, a vast sea of volatility has occurred in the broad Forex market the past two months. In some respects the USD/INR has been spared these dangerous waters because the Reserve Bank of India is seemingly using an invisible hand to guide the currency pair. Traders of the USD/INR should not get too comfortable and be ready for more volatility, this while still speculating on the current price range using solid risk management.
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