USDINR-Weekly Outlook-Venkat's Blog

6 janv.

The currency pair continues to keep the market guessing as it moves swiftly from 83.10 to 83.35 and reverses back. Every time the pair comes closer to 83 there is good amount of buying interest. As observed in the previous blog, the market is refusing to believe this move as it has wedded to the logic that the currency pair will not be allowed to trade below 83.00 levels no matter what happens to DXY, Yields or Stock market.

A few observations

• 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
  
• Ultra-low Vols may be a huge risk and there could be sharp move happening when no one expects
  
• Lower crude prices keep the demand for USD. After having seen the big move of 74 in Jan 22 to 83 in Oct 22, The Importers seem to Hedge themselves fully and the exporters may be waiting and might be repenting for having missed higher levels
  
• Expect the range of 82.90-83.25 would continue to hold for the week 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:
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 A deeper correction is long overdue. Market is expecting 82.70-83.35 will be protected. If appears that 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 result is that it has extended to third quarter as well
• A fresh start with New year and New quarter, the question still remains 81.50 or 85.50?
• There are fair chances of the breaking lower towards 82.50, at least for a short period

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