USDINR-Weekly Outlook-Venkat's Blog

The currency pair had an exception from the range of 83.10-83.31, due to technical outage of trading systems. Looking beyond this unusual trigger, there are a few interesting observations…

• The market has come to a logical conclusion that the central bank would protect 83.30 and easier way is to short and wait for lower band. This eventually failed
  
• General psychology of the market is that the INR has to break the barrier for continuing its journey towards 85 levels and that the Central bank is holding this range. If we examine the global scenario, every central bank is fighting to protect their currency. If that be the case what is wrong in maintaining low volatility
  
• On an analysis of conflicts leading to change in perception of Geo-political risks there may be a scenario to “Let-Go”. The big move in INR from 75.28 to 82.80 happened 3-4 weeks after the start of Russia-Ukraine war. However, there was a deceptive down move prior to the full blown up-move. So, it’s a wait and watch?
  
• As the base gradually shifting higher closer to 83, the market is no mood to believe decline towards even 82.75 and that the Central Bank would hold 83.30 for long
  
• Alternatively, the central bank may have changed its view to Let-Go or at least shift the band a bit higher by next Rs 0.20
  

The risky and sharp moves happen when no one expects. Expect the range of 83.00-83.45 would continue to hold for the week with a crucial support at 83.00 and there could be choppy moves within this range. A close outside this range requires re-assessment of risk/direction and target.

A few more observations:

• As noted in the previous blog, continue to keep the following input for quick reference.
  
• 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
  
• On analyzing the quarterly and half yearly charts, the risk on the higher side is till 85.70 followed by 86.10 which is the channel top and the down side is 77.70
  
• We have been witnessing depreciation for the past 12 years starting 2011 with exception of 2017. We are nearing close of the tenth month. Will 2023 is be another 2017 or as usual? Monthly/Quarterly/Half yearly charts do not show significant signs of lower levels yet. Only a weekly close below 82.70 can help chances of lower levels.
  

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