USD/INR Above 95.00 as US Inflation Data Nears

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The recent price action in this currency pair should make speculators feel more comfortable about their perceptions and pursuit of the currency pair. While the Indian Rupee is not noted for correlating to the broad Forex market in a purely intraday manner, the USD/INR certainly provides not only a historically bullish trajectory for consideration but does in fact react to shifting sentiment in the global markets. The ability of the USD/INR to move higher the past handful of days should not have surprised many, and now financial institutions and day traders must pay attention to upcoming U.S inflation data.

USD/INR Gains as Traders Position Ahead of US CPI

Current conditions in global Forex have been choppy the past week, this as behavioral sentiment has taken another nervous turn. The USD/INR which had been demonstrating a tendency to remain in known lower realms has returned back to its higher ratios in the past few sessions and action early this morning has added some additional bullish flavor. The circumstances surrounding the Indian Rupee remain stable regarding government and Reserve Bank of India policy.

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The one constant everchanging dynamic the past handful of months remains a focal point, the higher costs of energy and inflation concerns not only within India but throughout the world. The Iranian conflict shows no signs of ending. Energy costs remain elevated and now the U.S will issue Consumer Price Index data on Friday. However, because of the lower volume in the USD/INR some financial institutions may be positioning themselves now – before the U.S inflation data is released - this way early next week the institutions might prove to be ahead of the impending curve per their outlooks.

US CPI and Fed Decision Could Shape USD/INR Direction

While it difficult at best to project what the exact data results will be in the U.S inflation reports tomorrow, they are expected to be higher. Added to this notion is the thought that the Indian Rupee has consistently been losing value over the long-term. Financial institutions have clearly bought the USD/INR over the past handful of days after lows were demonstrated.

The higher price action in the currency pair has brought the USD back into a known higher realm. Value for the USD/INR at this moment is around 95.2375 depending on the bids and asks. The spread has been deep early today and this may continue into the near-term, particularly as nervousness grows not only about U.S inflation date via the CPI, but also next Wednesday’s U.S Fed FOMC interest rate decision. The USD/INR’s sudden return to its higher elements is not exactly newsworthy, except it points out existing cautiousness which may build.

USD/INR’s Long-Term Bullish Trend Remains in Focus

The ability of the USD/INR to return above the 95.0000 yesterday and another dose of upwards buying this morning signals that financial institutions who are performing transactions for their commercial contracts understand that the recent selling seen may be running out of momentum. Certainly reversals lower in the USD/INR will still occur, but looking for a return to the incremental upwards trajectory of the USD/INR to re-develop isn’t earth shattering – it is a return to the norm. The Indian Rupee isn’t likely to develop a consistent downwards path that is long lasting until the Indian government undertakes structural policy changes. Perhaps those days are coming, but they have not been proven yet. Day traders remain under a shadow of difficult decisions if they decide to speculate on the USD/INR.

USD/INR Price Chart

USD/INR Tests 95.20 After Strong Buying Momentum

The USD/INR move higher which began in earnest this Tuesday, after a few days of the USD/INR incrementally inching upwards – has displayed some price velocity. The springboard upwards not only happened this Tuesday, but yesterday and early this morning too action higher has been strong. The 95.2000 ratio should be watched carefully to see if it is maintained. If the USD/INR suddenly sparks lower today and challenges the 95.1000 level this would be an indication nervousness is high in financial institutions dealing with the USD/INR. A move below 95.0000 in the short-term would catch many folks off guard, but many do not expect that to happen.

Low Liquidity Could Bring Sharp USD/INR Price Swings

Again, trading the USD/INR is not easy for retail traders because of its lack of liquidity and oft exhibited surges both up and down. Trading in the USD/INR the remainder of this week is likely to take on the cautious attitudes via global markets as U.S data and inflation concerns become a focal point. There is a chance that financial institutions have positioned themselves ahead of anticipated outcomes and this adds to the potential of USD/INR volatility.

USD/INR Short Term Outlook:

Current Resistance: 95.2410

Current Support: 95.2100

High Target: 95.2800

Low Target: 95.1680

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EURUSD Chart by TradingView