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The USD/INR has delivered a month of volatility and speculators now thinking about their next moves are watching as apex highs are within sight.
In October of 2022 the USD/INR created all-time Forex rates near the 83.2900 ratio. The USD/INR has not traded above the 83.0000 level in a sustained manner since these marks were achieved around the 20th of October, but in early November and mid-December the 83.0000 mark was certainly in sight but acted as durable resistance. In early January of this year the USD/INR also came close to the juncture and on the 14th and 24th of this month – February, the currency pair again came close to 83.0000.
Reversals lower from the 83.0000 have proven rather solid the handful of times this level has been tested by speculative sellers, who had the courage to believe moves downward would be generated and were nimble enough to cash out winnings with take profit positions below. However, the USD/INR has likely proved extremely dangerous in February for many speculators as its suddenly robust bullish trend crushed plenty of resistance while moving higher until reaching the near record levels. The USD/INR was trading near the 81.6900 mark to begin February.
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Technical traders who believe the 83.0000 mark to start the month of March now is the target cannot be faulted. Having held as durable resistance over a handful of months when the USD/INR has driven higher, speculators may believe the 83.0000 is ripe to be attacked again and perhaps this time penetrated with an additional climb. A look at six month charts shows the USD/INR has traded higher before, even if it was only momentary.
- U.S February economic inflation data stirred buying in the USD/INR as financial houses reversed their dovish outlooks regarding the U.S Federal Reserve, and suddenly took the central bank’s aggressive rhetoric seriously.
- The USD/INR is near all-time record highs, but the bullish momentum being exhibited mirrors the broad Forex market.
The U.S Federal Reserve’s next interest rate hike will almost definitely occur on the 22nd of March. The Fed’s last monetary policy outlook delivered on the 1st of February noted that another increase of 0.25% was likely, what many financial houses did not believe was the central bank’s ambition to raise rates again following the March Fed meetings and into the spring.
However, strong jobs numbers and stubborn inflation reports the past few weeks have confirmed the U.S Federal Reserve’s outlook for now. USD/INR traders should note that U.S employment numbers will not be released until the 10th of March, not late this week. Until the U.S jobs numbers are published choppy conditions are likely in the USD/INR and resistance up above should be watched very carefully to see if it crumbles.
Speculative price range for USD/INR is 81.8100 to 83.5600
If any short sellers still exists in the USD/INR they should be very careful in the coming week and a half. Yes, the U.S Fed’s rate hike for March has been digested into the current price of the USD/INR, but speculators – and financial houses – need to consider carefully if the ‘worst’ of the news has been delivered which has given rise to another bullish trend in the USD/INR and a strong USD in the broad Forex market overall.
If the USD/INR does take a turn downwards before the U.S jobs numbers next week, it will likely be based on speculative selling being done by those who are betting on jobs numbers and inflation reports being less than anticipated. But after having been ‘burned’ in February with strong stronger numbers, betting on ‘weakened’ data could prove very dangerous and expensive if things go wrong. If the the U.S jobs numbers do come in weaker than expected, and inflation numbers suddenly stumble too, then the USD/INR could challenge the 82.3000 marks and lower, and suddenly flirt with 82.0000 again. However, traders may want to wait for the data outcomes before betting on these results.
If the USD/INR does break above the 83.0000 and sustains prices above this critical resistance, long-term charts will not be much use, and traders should try to get a feel for behavioral sentiment. If the broad Forex market remains nervous and the USD is strong against other major currencies the USD/INR could continue to incrementally climb in March. Traders looking for upwards mobility should be careful. Record territory if challenged is likely to produce extreme volatility.
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