- The first two and half weeks of May continued to display a remarkably tight trading range in the USD/INR as the currency pair practiced a rather firm resistance level near the 83.5240 vicinity with occasional outliers being seen.
- However, on the 17th of May the USD/INR then suddenly busted through support around the 83.39 mark which had been durable from the 6th of May until the selling pressure hit and created a depth around 83.2388.
The following Monday on the 20th of May the USD/INR challenged the 83.1812 ratio before reversing to Tuesday’s high near the 83.3670 number. Intriguingly, a bit more than one week later and as the month of June starts coming into sight the USD/INR is trading near the 83.3200 ratio with a flurry of activity being seen. What had been a rather serene trading range starting the month of May has seen more volatility in the past ten days of trading and speculators who are able to participate in the currency pair should pay attention.
The USD/INR Move to a Lower Range is Intriguing and Suspicious
The Reserve Bank of India has made it no secret that they have been monitoring and controlling the USD/INR value with a rather solid grip. The ability of the currency pair to test lows in the past week and a half is intriguing. A low of 82.9775 was hit this past Friday and while a slight reversal was seen, the USD/INR remained near the 83.0000 vicinity throughout Monday. Yesterday’s trading saw a rise upwards and while a bullish trend has been displayed speculators should be careful with their risk management in case an unseen hand from the Reserve Bank of India intercedes in the market.
The USD/INR is trading quickly today and its range has been wide which signifies heavy volume is being transacted. Commercial enterprise is certainly growing in India as it becomes one of the world’s biggest economies. The management of the India Rupee is important for the government of India, but questions about it being a free floating currency pair via the USD/INR are legitimate. The broad Forex market have shifted their outlooks regarding the U.S Federal Reserve and believe it will become more dovish in the mid-term which has made many other major currencies stronger against the USD. The ability of the USD/INR to trade slightly lower is welcome, but will it allowed to continue this trend over the month of June? It doesn’t seem likely.
USD/INR Political and Economic Considerations Combing
The results of the India national election will start to be heard on the 4th of June. There is a possibility the outcome of the vote will be known this coming Tuesday, but perhaps the final tally will not be known until the 5th. The results of the India election for the Lok Sabha will impact trading perceptions and financial institutions will react. Traders will be wise to brace for potential volatility early next week in the USD/INR, but it is unlikely the Reserve Bank of India will let the currency pair to suddenly trade in a massive volatile manner.
- Before the results of the India election, the U.S will publish important growth and inflation numbers late this week.
- Thursday’s U.S GDP results will impact Forex and the inflation numbers on Friday will affect current behavioral sentiment too.
- The question is if the USD/INR will be allowed to react to all the impetus in a manner that is outside its realm in what has been a rather well-practiced price range up until now.
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USD/INR Outlook for June 2024
Speculative price range for USD/INR is 82.9300 to 83.5600
The results from the India election that will be published next week will affect sentiment surrounding the USD/INR. If the Lok Sabha shows an influx of opposition members, meaning the ruling government will have to sometimes find a broader range of decision making, this may not be perceived as bad by financial institutions.
Stability in India for the economy is important. The USD/INR has produced an extremely tight trading range compared to most other major currency pairs. The freedom of a fully floating USD/INR without the potential of intervention from the Reserve Bank of India is not about to be delivered suddenly. Traders may want to continue to take advantage of perceived technical support and resistance levels while practicing patience, and using take profit and stop loss orders to take advantage of the rather intriguing value range.
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