After producing a reasonable bearish trend since the middle of July, the USD/INR has seen a change in momentum the past week of trading as support levels have become more resolute. Early trading this morning has produced a tight range between 74.6000 and 74.6500, but speculators certainly should expect to see the range widen as the day progresses. After trending downwards over the past few weeks, sellers have run into an emerging storm of reversals higher which have incrementally produced higher support levels. Will that pattern remain the same?
The approximate range for the USD/INR the past five days have been between the 74.3500 to 74.7800 junctures. Tests of support levels have been demonstrated; on the 27th of July a test of the lower support ratios saw a strong reversal upwards. The current price levels for the forex pair will be intriguing for speculators, but if they do not have a clear belief regarding technical direction it will be important to practice patience.
The Indian government has made several announcements regarding potential economic growth for the third quarter and it is doing its best to paint an optimistic picture. The government admits that the outlook for growth will be challenging and in fact will produce negative data this coming quarter, but it is also projecting a V shaped recovery at the end of the year. A cynic might suggest that this optimistic note about a potentially strong recovery is the only thing the government can say. What government in the world wants to warn its citizens that the economic landscape for the next year is going to be a struggle?
Indian continues to battle the impact of coronavirus like all nations, its citizens suffer because as an emerging economy many of the businesses it has have little support fundamentally and self-reliance is a huge part of the equation. While the government can issue mandates, it is infrastructure via banking and credit which will need to help spur on confidence for entrepreneurs which make up the backbone of India’s emerging economy as a global power.
The USD/INR should be watched carefully. Speculators who are optimistic about risk appetite remaining steady will likely eye short positions. It is suggested in the short term they allow the forex pair to range trade slightly higher to levels between 74.6700 and 74.7000 while using limit orders to enter the market with selling positions and looking for retests of support levels below.
Indian Rupee Short Term Outlook:
Current Resistance: 74.7000
Current Support: 74.5000
High Target: 74.8000
Low Target: 74.3500
