USD/INR Analysis
Morning Update: Will the USD/INR pair continue to advance, or will it reach the 200-day moving average ?
The RBI's monetary policy committee voted to keep the repo rate at 6.5 percent. In addition, the policy committee expects 4.5% CPI inflation and 7% GDP growth in FY25. RBI Governor Shaktikant Das also emphasized that the war against inflation is not ended; the fight to manage inflation on a long-term basis will continue, implying that rate reduction will not be implemented soon. Yesterday's higher-than-expected CPI statistics spurred demand for the dollar, and the DXY rose to 105.00.
In recent days, the USD/INR has traded sideways within its range, falling below our previously identified resistance level of 83.50. The USD/INR exchange rate has fluctuated between 83.00 and 83.50 during the last three weeks, dropping below 83.00 last month before recovering. Using the USD/INR chart and the February monthly options data, we can forecast whether the trend will continue to decline or rise:
- For the past three weeks, the USD/INR has traded sideways between 83.00 and 83.50.
- The chart suggests a strong support zone of 82.70-82.80, and USD/INR may experience significant 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 significant put writing near the 83.00 strike, indicating that the pair will soon rise beyond 83.50.
Please carefully review the preceding chart to acquire a better idea of the USD/INR price movement. For weeks, the USD/INR exchange rate has been between 83.00 and 83.50. Last month, the price fell and closed below the 83 level. The USD/INR fell below 83.00 last month, indicating that the pair is nearing the conclusion of its long-term volatility. However, the 200 DMA, which is close to 82.70, saw substantial demand, and buyers pushed the price over the 82.70-82.80 range anticipated by the USD/INR February monthly option chain.
Let's have a look at and analyze the USD/INR February monthly option chain.
The option chain in the table above shows a lot of put writing at the 83 strike, and even if the price has fallen below the 83.00 level in the spot market, the writers haven't given up, indicating that buyers pulled the price over the 83.00 line. The option chain indicates that the USD/INR could restart its strong upward 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 area, as shown in the chart and option chain above. It appears that consolidation will continue. Despite the dollar index's high volatility, the Reserve Bank of India's (RBI) policies have kept the USD/INR exchange rate relatively constant.
The USD/INR pair is expected to stabilize further, possibly to 82.80-83.50. This forecasts a 70-paisa range in which the USD/INR will move in the coming weeks before settling into a new range. Currently, the drop appears to be beneficial for purchasing USD/INR because the 82.70-82.80 area serves as a strong support level. Traders may look for buying opportunities in the USD/INR pair. Traders use the risk-reward ratio to balance money and potential losses. The ratio is useful in calculating a trade's risk and expected return. In general, increasing risk equals higher expected profits. Anything higher than 1:2 is regarded as an outstanding risk-reward ratio.
Examine the levels of support and resistance on the daily USD/INR chart. Each level is shown on the spot chart.
|
USD/INR |
Support |
Resistance |
|
Level 1 |
82.70 |
83.40 |
|
Level 2 |
82.50 |
83.50 |