USD/INR Forecast: July 2020

Robert Petrucci

The Indian Rupee will begin trading in July essentially where it began trading in June as the USD/INR continues to trade in a range pressed up against long term resistance.

The month of June provided speculators of the USD/INR room to test its range. The currency pair did not achieve a significant value change when taking a look at its starting and ending ratios for June, but in between its range certainly provided plenty of opportunity to test its trends. Traders should continue to see opportunities in the USD/INR. A look at its one month chart shows the currency pair offers the ability to buy and sell with carefully placed entry points that offer limited risk.

The USD/INR is not a standard currency pair; it is classified as an emerging market asset and carries a significant amount of volatility under some circumstances. However, the month of June produced a trading range which was largely between the 75.3000 and 76.2000 junctures, meaning if proper leverage and stop losses were effectively used a trader would not be killed by sudden gaps developing because of a lack of volume.

June also produced three distinct inflection points that can be easily seen on a one month USD/INR chart. The USD/INR has a tendency to consolidate and then move rapidly from resistance and support levels. The currency pair is susceptible to risk appetite globally, but it is also controlled by the Indian government closely and sometimes its transparency can be lacking regarding central bank policy. However, the USD/INR is growing in popularity as a speculative trading asset in forex.

For a broad perspective of the USD/INR it is recommended to take into consideration the Indian Rupee is still trading within its weaker range. The value of the Indian Rupee has taken a hit since the onset of coronavirus and its implications have created concerns in India as the pandemic tries to be managed. The USD/INR has also been hit with worries about the current political tensions between India and China regarding a border dispute. The combination of coronavirus and its economic impact, and political tensions have not helped the value of the Indian Rupee the past couple of months.

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However, putting concerns regarding risk sentiment into perspective the Indian Rupee has begun to show signs of stability and the rather tight range displayed in June by the USD/INR gives this clarity. Speculators who carry a belief of optimism regarding India’s ability to manage its economy under the shadow of coronavirus and who also believe tensions between India and China will reduce may feel tempted to seek better values with the Indian Rupee by selling the USD/INR.

Traders who believe risk adverse sentiment should be stronger will however be tempted to buy the USD/INR and test resistance levels which appear vulnerable. Resistance levels of 76.0000 could prove tempting for speculators who believe the US Dollar should be bought against the Indian Rupee. And if resistance levels above are broken the next logical target could be 76.2000 if weakness persists for the Indian Rupee.

However, intriguingly upper resistance for the USD/INR seems very strong near the 76.6000 level, meaning that buyers of the USD/INR may be attempting to wish for values which have limited upside potential. Support levels may have the most ability to experience tests and create opportunities for selling positions of the USD/INR to prove worthwhile. If risk appetite remains stable globally, shorting the USD/INR may actually be the best speculative trade for this currency pair.

USD/INR Outlook for July:

Speculative price range for USD/INR is 74.7000 to 76.6000

Support at 75.3000 is a prime juncture and may be create a test of 75.0000 if broken downwards

Resistance at 76.1000 may prove capable and cause reversals, unless the 76.2000 juncture is toppled upwards

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Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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