USD/INR Analysis
Morning Update: Will the USD/INR pair continue to rise, or will it hit the 200-day moving average following the RBI policy ?
Today, the RBI's monetary policy committee voted to retain the repo rate at 6.5%. In addition, the policy committee forecasted 4.5% CPI inflation and 7% GDP growth in FY25. RBI Governor Shaktikant Das also stated that the struggle against inflation is not done; the fight to limit inflation on a long-term basis would continue, which indicates that rate cuts will not occur soon.
In recent days, the USD/INR has traded sideways within its range, dipping below our previously indicated resistance level of 83.50. The USD/INR exchange rate has varied between 83.00 and 83.50 in the last three weeks, falling below 83.00 last month before rebounding. Using the USD/INR chart and the February monthly options data, we can predict whether the trend will continue to fall or rise:
- For the previous three weeks, the USD/INR has been trading sideways between 83.00 and 83.50.
- The chart shows a strong support zone of 82.70-82.80, and USD/INR could see major demand near the 200-day moving average, which is also around 82.70-82.80.
- The USD/INR monthly option chain for February also shows substantial put writing near the 83.00 strike, implying that the pair will rapidly surge above 83.50.
Please carefully analyze the preceding chart to gain a better understanding of the USD/INR price movement. For weeks, the USD/INR exchange rate has been between 83.00 and 83.50. Last week, the price dropped and closed below the 83 level. The USD/INR broke below 83.00 last week and remained below it following October, indicating that the pair is nearing the end of its long-term dispersion. However, the 200 DMA, which is near to 82.70, showed significant demand, and buyers accelerated the price over the 82.70-82.80 range predicted by the USD/INR February monthly option chain.
Let's have a look at and understand the USD/INR February monthly option chain.
The option chain in the table above indicates a lot of put writing at 83 strikes, and even if the price has fallen below the 83.00 level in the spot market, the writers haven't given up, indicating that purchasers drove the price above the 83.00 line. The option chain shows that the USD/INR may resume its strong rising trend and return to the 83.50 spot level.
The Dollar-Rupee pair (USD/INR) has been consolidating for several months in the 83.00 to 83.50 range, as indicated in the chart and option chain above. It appears that the consolidation will continue. Despite the considerable volatility of the dollar index, the Reserve Bank of India (RBI)'s policies have kept the USD/INR exchange rate reasonably stable.
The USD/INR pair is projected to consolidate further, possibly between 82.80 and 83.50. This predicts a 70-paisa range within which the USD/INR may fluctuate in the next weeks before settling into a new range. Currently, the decrease appears to be favorable for purchasing USD/INR because the 82.70-82.80 area serves as a solid support level. Traders may seek buying opportunities on the USD/INR pair. Traders utilize the risk-reward ratio to balance their capital and prospective losses. The ratio is important in determining a trade's risk and projected return. In general, increased risk leads to larger expected returns. Anything more than 1:2 is considered an excellent risk-reward ratio.
Examine the levels of support and resistance on the daily USD/INR chart. Each level is displayed on the spot chart.
|
USD/INR |
Support |
Resistance |
|
Level 1 |
82.70 |
83.40 |
|
Level 2 |
82.50 |
83.50 |