The USD/INR hit the 75.000 level yesterday as the forex pair was hit with strong volatility and global risk sentiment became extremely nervous. However, after hitting the high water marks, the Indian rupee began to see a sustained reversal downwards. The USD/INR is still within the upper boundaries of its mid-term range and speculators may believe if calmer trading conditions begin to be demonstrated, a challenge of support levels will be triggered.
Speculators should acknowledge that abrupt movements are still within the realm of possibility in the coming day. While it appears the US election does have a result which will become official soon, this doesn’t mean that there will not be developing news which could roil the financial markets. The USD/INR is a candidate to reignite its downward momentum if tranquility builds within financial institutions, but today’s trading could still deliver some surprises.
With the notion that speculators need to be ready for unexplained detours, they should also be willing to assume risk-taking if they are interested in pursuing the USD/INR. Support levels are likely to be challenged near term. Intriguingly, the current price range the Indian rupee is now displaying has not seen a sustained track record, meaning that trading above the 74.000 level looks suspiciously vulnerable and should be targeted for potential bearish reversals lower.
In early trading this morning, the USD/INR has seen some downward pressure emerge, but speculators may believe there is additional downside potential which can be anticipated. From a risk perspective, while the USD/INR certainly proved it had the ability to race towards higher resistance levels yesterday, its support levels below near term are likely to become the focus for many. The question is which side of the trade carries the most potential?
Selling the USD/INR and looking for targets below that focus on a bearish path seems the logical pursuit. Traders should not expect the USD/INR to simply rocket lower and reestablish its lower value range within the 73.200 to 73.800 instantly, it will likely take time. Which means speculators will need to be patient and use risk management wisely. The US elections will continue to create impetus within the financial markets today and traders must guard against negative surprises, but risk takers may feel believe bearish sentiment for the USD/INR will gather steam.
Indian Rupee Short Term Outlook:
Current Resistance: 74.670
Current Support: 74.040
High Target: 75.030
Low Target: 73.780
