USDINR-Weekly Outlook-Venkat's Blog

17 Nov 2023

To compensate the technical outage of trading systems which happened in the previous week which saw the pair temporarily breaching the crucial 83.32, the pair did the opposite by declining sharply towards 82.92 for the first time after last week of Sep 23. However, the euphoria was short lived and the pair is back in its original territory of 83.10-83.30.
A few observations

• As the base gradually shifting higher closer to 83, the market is no mood to believe decline towards even 82.75 and that the Central Bank would hold 83.30 for long
  
• General psychology of the market is that the INR has to break the barrier for continuing its journey towards 85 levels and that the Central bank is holding this range. If we examine the global scenario, every central bank is fighting to protect their currency. If that be the case what is wrong in maintaining low volatility
  
• Declining crude prices should keep the trade deficit lower. However, there is a huge gap. From where this demand is met? Do not see the Central bank only as the seller
  

The risky and sharp moves happen when no one expects. Expect the range of 83.00-83.45 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.
  
• 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
  
• 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 tenth month. 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.