USD/INR: Fragile Sentiment Feeds Bullish Trade Speculation

Robert Petrucci

The USD/INR is challenging mid-term highs as fragile global financial markets have helped fuel bullish speculative behavior in Forex.

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The USD/INR surpassed early August highs early today as bullish momentum has seen additional fuel thrown into a speculative fire. Risk sentiment is fragile in the global financial markets and Forex has continued to see rather volatile conditions flourish with a stronger USD at least in the short term creating a whirlwind of fast results. As of this writing, the USD/INR is near the 74.4500 mark and a high of nearly 74.6500 was demonstrated early.

Yes, the USD/INR has reversed off highs attained earlier this morning, but the Forex pair remains within the grips of its higher value band and support ratios should be studied. If the rather close price of 74.4000 can be sustained and the USD/INR is able to consolidate within its loftier realms, traders cannot be blamed for suspecting additional buying may be demonstrated near term. If the 74.4000 level does prove vulnerable, technically the 74.3300 juncture could be tested.

However for the moment, risk reward scenarios seem to favor a bigger move to the upside.  Yes, the USD/INR is traversing within the upper realms of its price range, but the pair has swam its current waters in the recent past. From the 1st of July until the 20th of the same month, the USD/INR tested the 74.8500 level several times and in fact touched the 75.0000 juncture on the 19th of July before beginning a reversal lower.

Speculators who want to sell the USD/INR because they believe it has been overbought will be making a wager against the prevailing trend. Yes, the USD/INR was trading near the 74.0500 from the 28th of September until the 3rd of October on several occasions, but support levels have been increasing. Current short-term support near the lower realms of the USD/INR could prove to be rather durable. So sellers of the USD/INR are encouraged not to be overly ambitious and cash out profitable trades when they emerge.

Cautious bullish speculators may want to wait for additional reversals lower which come within sight of current support levels.  If the 74.4300 to 73.4000 ratios do prove adequate as support, traders cannot be blamed for believing the 74.5000 to 74.5500 levels are legitimate targets near term. Traders are reminded to use solid stop losses to protect against the threat of sudden spikes. However, it does appear the USD/INR could make a move upwards faster, when compared to a downwards move which is likely to be only a natural trading cycle in the short term.

Indian Rupee Short-Term Outlook

Current Resistance: 74.5250

Current Support: 74.4050

High Target: 74.6700

Low Target: 74.3300

USD/INR

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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