- The USD/INR will start this week’s trading near the 83.3400 price level depending on the bid and ask.
- Speculators who have been pursuing the currency pair on retail trading platforms may have been transfixed by the rather calm bearish trend the USD/INR seemingly had gathered since the first week of December and into the second week of March.
- However, volatility began to flourish early on the 13th of March and suddenly the USD/INR went from the 82.7745 realm upwards and touched a high around the 82.9100 level. And that was not the end of the move higher.
While the Reserve Bank of India certainly has practiced a calm invisible power over the USD/INR, traders were ‘treated’ to a softer grip on the currency pair starting in the second week of March. The USD/INR in the past few months had shown bearish tendencies and hadn’t correlated to the broad Forex market in many ways. The ability of the downwards trend to develop into the second week of March was intriguing in the USD/INR particularly because other major currencies have struggled against the USD since the beginning of this year. In other words there was a lack of correlation in the currency pair.
Clashing Policies and the Rise of the USD/INR Once Again
The Reserve Bank of India seems to have removed its tight grip on the Indian Rupee in the second week of March, allowing the USD/INR to begin drifting upwards. Many other currencies had already seen plenty of volatility against the USD, but the ability of the Indian Rupee to start moving higher seems like an outward reflection by the Reserve Bank of India that the U.S Federal Reserve may not actually be able to be as dovish as had been anticipated for this calendar year.
The notion that the U.S Fed might not be able to cut interest rates more than a couple of times during 2024 has started to become rather loud chatter in global financial institutions, and it is more than likely the RBI is listening and acting upon this sentiment. The USD/INR started to move higher swiftly and by the 15th of March the currency pair was near the 82.8500 ratio. Then on the 19th of March the 83.0000 level was penetrated and it was sustained. Within a day the USD/INR was suddenly traversing the 83.2000 mark and its momentum higher wasn’t finished.
Record Values and Then a Slight Reversal Lower in the USD/INR
On the 22nd of March the USD/INR raced towards the 83.7000 level. This value was an all-time high in the currency pair, eclipsing highs made in August of 2023 and tested again in early December. It should be stated that the highs attained by the USD/INR last year correlated to hawkish U.S Federal Reserve interest rate policy. After touching the highs on the 22nd of March last week, the USD/INR did start to trade lower.
- Once again the USD/INR finds itself lingering near the 83.3400 vicinity. Early trading this week will be intriguing regarding sentiment for speculators, but also regarding the Reserve Bank of India.
- U.S jobs data will be released this Friday which will be important for the broad Forex market, weaker data could help propel bearish sentiment in the broad Forex market.
- However conditions in the USD/INR need to be thought about in conjunction with policy coming from the Indian government. Elections in India will start this month and financial institutions probably believe the Reserve Bank of India would like a stable USD/INR throughout.
USD/INR Outlook for April 2024
Speculative price range for USD/INR is 82.8570 to 83.5740
Day traders of the USD/INR who are pursuing the currency pair via broker platforms and using leverage should be careful. The current price of the USD/INR is once again touching levels seen in early January. The ability of the USD/INR to resume its downward trajectory may face headwinds if the Reserve Bank of India believes the U.S Fed is not going to become as dovish as was anticipated. Support and resistance levels over the coming week around the 83.2000 and 83.4000 ratios may prove to be interesting, but Friday’s job numbers will certainly create speculative price action and likely a wider price range.
Traders wagering on the USD/INR should be careful and use quick hitting targets with realistic goals. Ambitious speculators who are looking for bigger moves will need to be extremely cautious. The USD has gotten stronger throughout the broad Forex market; and many believe it has been overbought, but trading conditions have been very choppy and the USD/INR is likely to reflect nervous sentiment.
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