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Cautious Behavior Creating Incremental Move Upwards


The USD/INR is producing rather cautious buying for the moment, as financial institutions brace for the U.S Federal Reserve’s FOMC pronouncements tomorrow.


Since touching a low of nearly 81.5580 on early Thursday of last week, the USD/INR has climbed incrementally higher.  Yes, there have been plenty of reversals up and down as the currency pair has tracked higher in the past few days, but the value of the USD/INR as of this writing is near the 81.8650 mark. Price velocity within the USD/INR in the past couple of hours has also begun to show signs of volatility, and this is likely a direct reflection of nervous sentiment starting to be generated as investors try to position their holding of the currency pair before the U.S Federal Reserve’s FOMC Statement tomorrow.

Most financial institutions have already factored a rate hike of 0.25% into the USD/INR taking place on Wednesday. However, what is likely starting to cause fragile behavioral sentiment are worries the U.S. central bank will hint that another June Federal Funds Rate increase may be in the cards.

Yesterday’s inflation data via the ISM Manufacturing Prices provided a surprisingly strong upwards reading. The Federal Reserve has been sounding an alarm about inflation for a long time. Let’s remember what happened in early February this year when the Fed was aggressive with its interest rate rhetoric, the USD got stronger. This Fed rhetoric caught many traders by surprise and caused losses.

USD/INR traders should not fall asleep on their positions, meaning they should remain alert because volatility will certainly increase over the next day and a half. This morning’s high of nearly 81.9000 should serve as a cautionary signal for all USD/INR traders.

While downside momentum has been nice and may have produced solid results recently, the price spread of the USD/INR is definitely going to widen. Risk taking needs to be conducted with conservative leverage, entry price, stop loss and take profit orders already working. The 81.9000 mark may be acting like a magnate via financial institutions targeting this high in the near term.

Jobs Data is coming this Friday from the U.S too and it will Increase Fireworks in the USD/INR

The USD/INR is in a rather intriguing spot regarding value. In recent trading it has been able to sustain prices below the important psychological mark of 82.0000, tomorrow’s trading may prove interesting to see if this level can remain as durable resistance. Fireworks should be expected in the USD/INR near-term and speculators wagering on the currency pair before the U.S. Federal Reserve’s rhetoric tomorrow are taking a major risk. Again an interest rate increase tomorrow is nearly a certainty, but June’s outlook remains troubling. Will the Fed pause or will they increase again next month?

  • Traders should also keep in mind that U.S. jobs numbers and earnings statistics will be published this Friday.
  • Traders need to use their full arsenal of risk-taking tools if they choose to participate in the USD/INR over the next 40 hours.

Current Resistance: 81.8810

Current Support: 81.8230

High Target: 81.9625

Low Target: 81.6990


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