Jackson Hole speech Exposes USD/INR Divergence as RBI Patience Tests

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The USD/INR continues to deliver an appealing dynamic for speculators who are keen on pursuing the currency pair. While volumes are not extremely liquid, what the USD/INR does offer people who have the opportunity and willingness to wager is a technical chart over the past five days which points out what appears NOT to be coincidence regarding support and resistance levels. In addition to this technical dynamic is the simple fundamental insight the USD/INR has been within the grasp of a long-term bullish climb due to structural weakness (or intended) policy of the Reserve Bank of India.

EURUSD Chart by TradingView

Impact From the U.S Fed Conference and Indian Government Policy

Today’s Jackson Hole Symposium which is being conducted by the U.S Federal Reserve in Wyoming will not have announced direct participation of India, but the outcome of the meetings being held today and tomorrow and the speech that Fed Chair Keven Warsh will deliver tomorrow will impact Forex and the USD/INR.

Global circumstance due to the ongoing Iran and U.S rhetorical battle which sometimes escalates into heightened military conflict is not fading quickly. Because of this energy prices remain a concern in India which points towards inflation and impacts the Indian Rupee negatively. But it is the long-term policy of the RBI and Indian government which refuse it often appears – to deal with the rather progressive loss of value in the Indian Rupee.

Technical Levels and Market Structure

Technical traders of the USD/INR can easily see that 95.7500 level late last week and early on Monday performed rather durable resistance. However, the nosedive produced on Tuesday which challenged the 95.4000 ratio and was sustained yesterday and into early today are also noteworthy. The USD/INR while correlating to the broad Forex market often persists in being its own boss. The technical playing field remains dynamic and fast.

In other words speculators should take into consideration global conditions economically, but also know that the Indian Rupee for the time being remains the master of its own universe. The lows that have been able to be accomplished sometimes feel like a show produced for the public. This in order to show them the USD/INR can move lower, only to abandon sustained downwards motion rather quickly and resume its march upwards in which resistance is not only tested but consistently proves to be vulnerable.

USD/INR Price Chart

Lack of Liquidity and Sudden Volatile Moves Makes Trading Difficult

The characteristics of the USD/INR are not going to vanish anytime soon. The upwards climb which continues to be demonstrated is rather consistent. No the momentum is not an easy trade to pursue via simple intraday quick targeting and hopes for sudden changes in value because of volatility. The USD/INR does not have enough volume to create a sincere speculative landscape for retail traders, meaning that pursuit of the currency pair must be done with extreme care and solid tactics at all time.

Yet, the persistent move higher in the USD/INR is likely going to remain the focal point regarding its integrity into the mid-term, this because the Indian government appears to be comfortable with this particular stance in order to try and help its export industry. Looking for upside price action in the USD/INR however is difficult for retail traders, this cannot be overlooked.

Short Term Outlook

With today’s Federal Reserve spectacle getting ready to be started, USD/INR traders should not be too worried about the substance of the event, except to say it will have some effect late tonight. However, it is tomorrow’s meeting and speeches regarding interest rates which will have implications for the broad Forex market and may impact the USD/INR awkwardly if there are surprises via Fed Chair Kevin Warsh’s words. But until then USD/INR traders should watch the current technical moves to try and understand the sentiment which is being demonstrated, and that seems to indicate financial institutions are showing short and near-term caution. Trading early on Monday could be intriguing in the USD/INR.

The challenge of higher prices late last week and the countermove back to lower ratios shows the intensity of the USD/INR value and serve as a warning. However, even though from a technical standpoint these moves might look intense to a retail trader they need to understand that the changes in value are actually quite limited. The use of leverage while betting on the USD/INR remains dangerous for day traders. Intraday movement is hard to predict in the currency pair, it is mid-term outlook which remains dominant.

USD/INR Short Term Outlook:

Current Resistance: 95.5590

Current Support: 95.4800

High Target: 95.6340

Low Target: 95.4220

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