USD/INR Forecast: US Dollar Continues to Consolidate Against the Indian Rupee
- This asset looks as if it is still stuck in the consolidation move.
- That’s not a huge surprise, this pair does tend to be very noisy and choppy at times, but ultimately, I think you’ve got a situation where traders are going to look at the global risk appetite profile more than anything else.
Looking at this, it’s obvious that the market has been going sideways for a while, with the ₹83.75 level underneath being a short-term support level. It also is where we see the 50-Day EMA currently residing, so that of course is an area where people will be looking at as a technical support level, plus it’s also an area that we have seen important more than once.
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Keep in mind that the bank of India does not allow this market to trade freely, and therefore we’ve got a situation where traders are looking at the central bank as controlling a range that they will be dealing with, but ultimately it’s obvious that we are going to see plenty of support underneath, and it does make a certain amount of sense considering that the world is full of all kinds of geopolitical concerns, and therefore does make a certain amount of sense that the US dollar would be thought of as much more attractive than emerging market currencies. Ultimately, I do think that the USD/INR market goes higher.
On a move above the ₹84 level, then I think it allows the US dollar to go looking to the ₹84.25 level, which is where we had peaked previously. Anything above there then allows a much bigger move, perhaps to the ₹85 level. On the other hand, if we were to turn around a break down below the ₹83.75 level and therefore the 50-Day EMA, then we have a shot at dropping all the way down to the ₹83.50 level where there has been a lot of noise in the past.
In general, this is a situation where traders will continue to see a lot of volatility but ultimately if we do rally from here, I think it’s a sign that traders will continue to favor the United States over riskier economies such as India.
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