The month of September has seen the USD/INR create in the past couple of weeks, a higher price range with fairly firm support and resistance levels technically.
As of this writing the USD/INR is near the 83.1150 price as the last week of September trading has gotten underway. A low of nearly 82.5300 to 82.5400 was seen in late August and early September. The USD/INR has correlated to the broad Forex markets remarkably well, but with certain elements of rather tight control from the Reserve Bank of India still hovering from above with an ‘invisible hand’.
Global Sentiment Remains Fragile and the USD/INR Remain Near Highs
In the past three weeks, starting around the 5th of September and as October gets ready to come into view the USD/INR has traded within a rather tight range between 82.8000 and 83.2800 with outliers. It should be noted technically the USD/INR has incrementally gained during this time period and its price action while appearing rather volatile from a one month chart’s perspective has in fact been without much volatility when percentage of values changing are considered. However, day traders speculating on the USD/INR and using leverage certainly can be affected by a high degree of ‘value volatility’.
The upwards movement in the USD/INR mirrors other major currency pairs which have traded against the USD. The U.S Federal Reserve last week maintained its rather aggressive interest rate stance and seems to be strongly indicating traders should expect another Federal Funds Rate hike in November.
Inflation in the U.S and globally remains problematic ,and this is largely due to the highs costs of energy seeping into all aspects of the world economy. The USD/INR is once again traversing higher realms and its ability to remain over 83.0000 is intriguing, but makes sense considering the high level of nervousness in global markets regarding risk shadows that are currently lurking over economies.
USD/INR Support and Resistance Levels and October Trading to Come
While the USD/INR has taken up position in a higher price range the past few weeks, the currency pair has accomplished this as U.S equities are coming under pressure and risk appetite globally is becoming fragile. The USD/INR did hit a high of nearly 83.3200 on the 18th and 20th of September, interestingly the higher prices occurred in anticipation the U.S Federal Reserve would not raise rate last week, but stay hawkish sounding. A slight reversal lower has taken place since the highs were hit, but they remain within sight.
The ability of the USD/INR to remain within the upper tier of its long-term price range and occasionally test new highs may be intriguing for speculators. However, USD/INR traders should also note sudden bursts downward of the currency pair can occur without notice when the Reserve Bank of India decides to step in and buy Indian Rupees to establish what they believe should be ‘market price’. Perhaps too, the Reserve Bank of India does this to sometimes go after buying positions they believe have potentially accumulated too much importance and want to punish.
- As risk appetite remains fragile globally, it remains interesting to see the USD/INR continues to incrementally test resistance levels and sometimes penetrate them while creating new highs.
- Traders who think the USD/INR is overbought need to understand the global dynamics taking place and amount of risk adverse sentiment that exists.
- A higher level of risk adverse sentiment in the global markets tends to make the USD stronger.
USD/INR Outlook for October 2023
Speculative price range for USD/INR is 82.4900 to 83.4300
Trading in the USD/INR remains intriguing and the higher elements of the price range have become established the past few weeks with consistency. The technical values of the USD/INR can certainly change quickly, but until global markets and financial institutions become more tranquil the strength of the USD/INR may remain rather durable within the higher price range the currency pair is traversing. If market conditions show continued selling for instance in U.S equities, global financial institutions may seek the safety of U.S Treasuries in which returns are guaranteed because of higher interest rates, making the USD stronger.
At the end of this week, Thursday, the U.S will release Gross Domestic Product numbers. The growth numbers should be watched, because the U.S economy continues to be somewhat stubbornly strong, which keeps the U.S Federal Reserve in an aggressive stance. Until U.S economic conditions begin to show true weakness and concerns about inflation fade, the USD/INR may continue to battle along its higher price range and challenge resistance. Speculators of the USD/INR need to remain patient and pay attention to the pulse of behavioral sentiment globally.
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