USDINR-Weekly Outlook-Venkat's Blog

10 thg 12, 2023

The currency pair continues its narrow range with a marginal shift on the higher side, Viz. 83.24-83.41. As observed in the previous blogs, at best we can see marginal shifting of the range by 0.10 on either side. The currency pair does not seem to be impacted by moves in DXY, Yields or Stock market/ It appears like mimicking CNY action/control. As observed in the previous blog:

A few observations

• Lower crude prices keep the demand for USD. After the big move of 74in Jan 22 to 83 in Oct 22, The Importers seem to Hedge themselves fully and the exporters may be waiting
  
• 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
  
• Expect the range of 83.10-83.45 would continue to hold for the week with a crucial support at 82. 90 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:

• As noted in the previous blog, continue to keep the following input for quick reference though it is repeated for the past 7 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:
  
• A deeper correction is long overdue. Market is expecting 82.70-83.10 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.
  
• The result is that it has extended to second quarter as well with a minor difference of the range as 83.00-83.40
  
• On analyzing the quarterly and half yearly charts, the risk on the higher side is till 85.70 followed by 86.10 which is the channel top and the down side is 77.70
  
• We have been witnessing depreciation for the past 12 years starting 2011 with exception of 2017. We are nearing close of the end of the year. Will 2023 is be another 2017 or as usual? Monthly/Quarterly/Half yearly charts do not show significant signs of lower levels yet. Only a weekly close below 82.70 can help chances of lower levels.
  

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