The USD/INR has pulled back a bit during the trading session on Thursday, as the ₹83 level continues to offer a significant amount of resistance. Looking at the chart, you can see how the 83 repeat level has been like a brick wall. The Bank of India continues to fight exchange rates going up there, and it will more likely than not tend to cause a lot of volatility. However, it’s worth noting that each successive low in this pair is higher than the one before it, and therefore it opens up the possibility of a bigger move.
If we do break above the ₹83 level, then I think it’s likely that we could go to the ₹85 level. This is based upon a potential “measured move” from what looks to be an ascending triangle. I think that almost everybody in the world is paying attention to the same chart with the same thought right now, and it’s only a matter of time before the US dollar gets a bit of a boost.
Pay Attention to Other Currencies
Pay attention to other currencies, because it is worth noting that during the day on Thursday, we had seen a significant amount US dollar strength, and eventually that may come into play here. The RBI does not want to get into an argument with the rest of the world, as the smaller central banks can be pushed around by big funds.
If we break down below the ₹82 levels, then it’s very likely that we will have to fall and test the ₹81 levels. On the other hand, if we break out above the 83 repeat level on a daily close, I think that will bring in a flood of new orders and will almost certainly have traders getting very aggressive to the upside in what would be the “FOMO trade.” I think at this point in time, that’s probably more likely than not, as this battle has been going on for some time. If we see a sudden “risk off” market around the world, the Indian currency will almost certainly pay a price as it is such a small market. On the other hand, if we were to turn around and take out the 200-Day EMA underneath, and saw US dollar weakness across the board, that may give the rupee some reprieve.
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