USDINR-Weekly Outlook-Venkat's Blog

FX_IDC:USDINR   U.S. Dollar / Indian Rupee
The pair was traded between 82.82 and 82.95. The currency pair continues to be in the narrow range. The good part is that the upside has gradually brought down from 83.30 to below 83. The Currency market seems to have lost the shine as most of the currencies are moving in a narrow range waiting for a trigger event. There is no action and best we can assume that the band is marginally lowered to 82.80 83.00.

A few observations
a. There is divergence seen in the charts
b. The currency pair does not seem to follow the DXY, Stocks or the Precious metals
c. Expect the range of 82.70 - 83.00 would hold for the week and there could be choppy moves within this range.

A few more observations:
Continue to keep the following input for quick reference though it is repeated for the past 8 months.
• The 82.75-83.25(with error adjustments) zone is the Fib projection of July 2011 to July 2013. Alternatively, the Fib projection of the move from Jan 22(Low) to Oct 22(High) and Nov 22 low also suggest the projection as 82.92. Hence, the importance. If breached, we may see another spike towards 85.70
• As noted in our 3rd July Blog:
o Ultra-low Vols may be a huge risk and there could be sharp move happening when no one expects
o A deeper correction is long overdue. The market is expecting 82.70-83.35 will be protected.
o The result is that it has extended to third quarter as well. The same kind of yo-yo moves may continue till one more quarter if we do not see a close below 82.70.
o The rates remaining in a small range is not anything new for the currency pair as we could see from the quarterly charts, it has been in small ranges for almost 3-4 quarters in the past once in every three years. However, this general behavior altered after 2008

• The currency pair is at a crucial level on a trend line from Nov 22, a break now or not in near future will be known this month
• The next couple of weeks are crucial. We will get to know if we are heading towards 82.30 or 83.50

Disclaimer: The views expressed here are personal and not connected to SYFX Treasury Foundation. The views are for learning and reference purpose only.


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