The USD/INR has turned in a remarkable short-term bearish direction and is within sight of late January values; this has developed before a major risk event ahead today.
The USD/INR is near late January values after a rather strong bearish reversal in the past few trading sessions. On Thursday of last week, the USD/INR was trading near the 82.6300 ratios when the currency pair started to find downward momentum. A low of nearly 81.6410 was displayed this past Friday and yesterday’s trading action sustained the lower depths.
The USD/INR is trading near the 81.7675 mark as of this writing and as always readers are urged to check on live market values to compare to this article. Intriguingly, the bullish run higher in the USD/INR can be interpreted as having started slightly before the broad Forex market, this because the currency pair touched a low on the 23rd of January near the 80.8300 ratios and then started to reverse higher.
The broad Forex market via the major currencies against the USD didn’t start many of their reversals higher until the 3rd of February. The USD essentially began to get much stronger in early February when the Federal Reserve increased its interest rate, but also sounded more aggressive than expected. A couple of days later the Fed rhetoric was followed by strong employment and inflation statistics confirming it remained rather persistent.
Coincidence or Not, the Risk Events Ahead will likely cause Volatility in the USD/INR
Oddly enough there are two risk events coming soon that align with what happened in early February. Today Federal Reserve Chairman Jerome Powell will speak in front of the U.S. Senate. Certainly, he will try to speak in a tranquil manner and not scare the marketplace, but he will definitely talk about inflation and monetary policy.
If Powell should say something surprising it could cause instant movement in the USD/INR. Later this week, on Friday, the U.S Non-Farm Employment Change numbers will be published. If the jobs and inflation data coming then produce a shock, further volatility can be expected in the USD/INR.
- The fact that the USD/INR has provided a downturn since Thursday doesn’t correlate to the broad Forex market easily.
- Forces within commerce could be moving the USD/INR with large transactions, but the downward movement is intriguing and needs to be monitored.
- Considering the USD/INR began it bullish trend sooner in late January, compared to the broad Forex market which waited until early February, should be noted by speculators as a potential signal.
Fed Chairman Powell is unlikely to frighten the marketplace today. However, if Powell sounds more hawkish than expected this could cause buying in the USD/INR. But if he sounds rather calm and speaks about inflation in a manner that he voiced early in February, perhaps financial houses will remain tranquil and consider it rhetoric they have already heard. Risk management will be important today. Because the USD/INR already is near important technical support, traders should be ready for a burst of volatility developing in the short term.
Current Resistance: 81.8190
Current Support: 81.7075
High Target: 82.0710
Low Target: 81.6130