- After sinking to a low of nearly 83.4475 on the 19th and 20th of September the USD/INR has climbed higher again.
- The currency pair is around the 83.7825 ratio as of this writing with wide spreads being displayed which makes using entry price orders for the USD/INR a constant need.
- The ability to climb back to known higher prices is not a surprise for the USD/INR.
- However, the trading of the currency pair remains completely speculative for day traders brave enough to try their luck with the USD/INR.
Perhaps the USD/INR move lower can be associated with the interest rate cut from the Federal Reserve on the 18th of September by 0.50%. Yes, most other major currencies also gained strength against the USD in the days afterwards. However for traders who are experienced in the USD/INR this narrative is probably very questionable. The USD/INR has not correlated to the USD in any strict fashion this year. The Reserve Bank of India tightly controls the value of the USD/INR and will continue to do so.
U.S Economic Data Non-Correlation and Large Commercial Transactions in India
Coincidently it looks good that the USD/INR created bearish movement following the Fed’s interest cut rate. But since the downturn which lasted into the 23rd of September, the USD/INR has climbed when other major currency pairs have largely held onto their stronger values against the USD. The notion that large commercial transactions within India and perhaps government bonds trading affected the value of the USD/INR from the 19th until the 23rd of September needs to be considered.
Day traders who pursue the USD/INR should understand that there is a lack of transparency. Yes, we know the interest rate levels from the Reserve Bank of India and we have some clarity regarding what the U.S Federal Reserve will do in the mid-term. However, we also know that India continues to keep the Indian Rupee within the weaker realms of its value, likely to sustain strong commerce internationally and keep the dynamic growth rate for India healthy. Traders can essentially only try to ride momentum they see being generated via technical considerations in the USD/INR and this is dangerous.
Sudden Bursts of Dynamic Trading in the USD/INR
The ability of the USD/INR to touch the 83.9900 mark early in September and not surpass the 84.000 level is a clear indication that the Reserve Bank of India has certain value mandates. The ability of the USD/INR to fall from 83.9985 ratio on the 12th of September and to begin incrementally start to track lower in the coming days until the 23rd is also a sign the Reserve Bank of India was clearly in charge of the price action in the USD/INR.
- In other words it should be noted the bearishness seen in the middle of September, actually started before the U.S Federal Reserve cut its interest rates, meaning the Indian government was likely positioning for an adjustment that they felt was needed.
- The U.S will issue its jobs numbers this Friday and the impact from the Non-Farm Employment Change reports will be important in Forex, but its relationship to the USD/INR and its momentum is uncertain.
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USD/INR Outlook for October 2024
Speculative price range for USD/INR is 83.3700 to 83.9600
The price realm of the USD/INR may appear wide to day traders looking to wager on the rather small movement of the currency pair via price velocity. However, experienced traders know the USD/INR remains a controlled Forex pair that is dangerous not only because there isn’t much transparency to guide day traders, but also because momentum shifts can occur when they are least expected.
Large financial institutions inside of India due to their commercial cash contracts likely have more insights regarding the trading of the USD/INR, but even they must be challenged and need to be extremely careful. The price values of the USD/INR are likely to remain within the higher tier of its value in October and traders need to remain constantly vigilant. Not only are entry price orders needed, but take profit and stop loss orders need to be used too. The Reserve Bank of India is in charge of this Forex game.
Ready to trade our monthly forecast? Here’s a list of some of the top forex brokers in India to check out.