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Eruption Higher Highlights Short-Term Wager Dangers


Since early this morning the USD/INR has ripped higher and is suddenly above the 82.0000 level again, as cautious short-term attitudes have likely caused buying to flourish.


Traders of the USD/INR who have been pursuing downward momentum from the currency pair have likely been given a rude awakening this morning.  The USD/INR has erupted higher and moved from what appeared to be almost a comfortable level of nearly 81.8000 to over the 82.0000 ratio in a rather quick fashion. It is possible that some of the sudden buying activity has been caused as financial institutions brace for potentially dangerous inflation data coming from the U.S. tomorrow.


However, the likelihood also exists that larger unknown activities have caused the USD/INR to rocket higher this morning. Day traders in the USD/INR have to understand that the amount of volume within the currency pair is large, but not large enough to keep it from reacting to large transactions taking place from corporate or central bank spheres.  Price velocity seen today can be explained away by pointing to warnings about potential cautious behavior developing, but it may also be a more simple development like a major corporation making a huge transaction within a market unprepared for the dynamic.

Since starting this article the USD/INR has continued to climb and is nearly 82.0900 with lightning price action taking place. It appears that important forces are making a move within the USD/INR and day traders need to be extremely careful. After testing lows around the 81.6200 level a few times last week, suddenly the USD/INR is testing highs last seen on the 21st of April.

Cautious buying behavior may be causing some of the USD/INR fireworks now because of the currency pair breaking the 82.000 level and showing an ability to sustain values above in the short term. Traders who want to wager on the USD/INR today should be extremely careful and use very limited leverage if they insist on betting.

The move higher early this morning in the USD/INR looks like a lightning bolt technically. Intriguingly the New York Fed President, John Williams, will be speaking today and this may cause a reaction in the USD/INR, and tomorrow’s CPI statistics are certain to cause a flurry of activity in the currency pair as traders react to the U.S inflation data. However, something else is happening in the USD/INR this morning, and the move higher needs to be treated with respect by day traders.

  • If U.S CPI numbers come in stronger than anticipated tomorrow it could spur more buying of the USD/INR in the short term.
  • However, taking into consideration the leap upward in the USD/INR in the past couple of hours, traders should be braced for more volatility, and contrarian reactions may develop if the USD/INR is perceived as overbought in the near term.

Current Resistance: 82.1300

Current Support: 82.0550

High Target: 82.1875

Low Target: 81.9560


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