Trading conditions in the USD/INR have presented day traders with a classic case of a rather wide price range that looks technically attractive but potentially has been very costly for the unprepared. Early values last week continued to climb higher until this past Thursday when the USD/INR hit an apex of nearly 82.3200.
On Friday the 14th of April the USD/INR hit a low around the 81.5270 mark, followed by a reversal higher until this past Thursday as stated above. However, since hitting late last week’s highs which had not been seen since the first week of April, the USD/INR has suddenly moved lower again. Technically the movement of the USD/INR may look enticing to traders, but speculators with experience understand that every moment of trading within the USD/INR offers potentially dangerous volatility.
Risk Management is Vital in these Coming Days for the USD/INR
Risk management needs to be used to guard against reversals, but more dangerous than reversals, the use of too much leverage can leave traders who do not have enough cash in their accounts to withstand volatility, very vulnerable to bad results. As of this writing the USD/INR is maintaining its lower price range around the 81.8800 level with fast results being seen. Traders need to know existing fragile behavioral sentiment and key U.S economic data could combine in the coming days and create more dangerous conditions.
The price movements below the 82.0000 realms for the USD/INR suggest that some financial institutions are positioning for a bearish trend take hold. While an interest rate hike next week from the U.S Federal Reserve has been factored into Forex, what financial houses do not know is what the Fed will do in June. Data from the U.S. starting today via the CB Consumer Confidence statistics may start to give some additional clarity regarding the Fed’s actions in June.
USD/INR Volatility Likely to Continue and Cause Fast Speculative Conditions
While it may be tempting to look for more downside price action in the USD/INR based on the notion financial houses appear ready to aim for lower price levels, the potential of stronger-than-expected U.S. economic data this week could cause problems for day traders. On Thursday growth numbers via the U.S Advance GDP will be published, and on Friday inflation data is on the schedule. Traders should not be overly ambitious while the U.S. data awaits and perhaps even wait for results after the publication of each report due to take action.
- The ability to trade below the 82.0000 and remains sustained should be watched, if today’s CB Consumer Confidence report is weaker than expected the USD/INR could go lower.
- However, a stronger U.S. consumer sentiment outcome would likely cause the opposite reaction in the USD/INR.
- Traders who believe they have ‘correct’ technical perceptions before pursuing a position should use cautious leverage to protect against surprise results from the U.S. data today and the remainder of this week.
USD/INR Short-Term Outlook:
Current Resistance: 81.9350
Current Support: 81.8410
High Target: 82.0560
Low Target: 81.7815
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