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USD/INR: Narrow Price Range as Nervous Sentiment Exhibited

The USD/INR has delivered a rather narrow price range the past four days of trading as the currency pair awaits impetus from crucial U.S risk events.

The USD/INR is trading near the 82.7000 ratio as of this writing. While the currency pair over the past month has seen a rather incremental climb higher, the past handful of days has seen rather sideways price range emerge. Talk about Reserve Bank of India intervention has been discussed widely and this has caused speculative caution too. However, risk events from the U.S which will be delivered soon are also a catalyst for conservative trading in the USD/INR and broad Forex markets globally.

Trading Tip Regarding Bias that Forex Speculators should try to Avoid

A very important aspect for USD/INR traders to consider is that they should remove any bias they may feel personally regarding the Indian Rupee. Traders closely connected to the currency they are trading, particularly if they are citizens of the nation; tend to believe their national currency should always be stronger no matter the circumstances. This notion of bias does not always work out well for traders with a nationalist leaning.

The Indian Rupee is no different regarding its ability to maneuver against the USD like many other major currencies. While the Indian Rupee certainly has its own financial capabilities, the USD remains the dominant currency on the block and affects most outcomes. If a trader can remove their bias and love of their nation from their trading sentiment, this often makes it easier to have a more realistic viewpoint about potential price direction in the short-term and long-term. The Indian Rupee is an important global currency, one that will grow in stature, but traders should remember current circumstances too.

USD/INR Five Day Chart as of 24th May 2023

U.S Debt Ceiling Concerns and the Upwards Drift of the USD/INR Causing Problems

Concerns are being voiced regarding the failure of U.S debt ceiling talks, the inability to not find an agreement in the U.S Congress is problematic. June 1st is supposedly the date the U.S government must reach a conclusion. The past week has seen signs from Democrats and Republicans acknowledging the importance of finding a settlement, but political rancor still is making a mess of the situation. Trading institutions are certainly not happy about the loud debate and could ‘punish’ financial assets more over the short-term until a debt ceiling compromise is reached.

The move higher in the USD/INR has likely caught many speculators by surprise the past month. However, the drift upwards has correlated to the broad Forex markets the past couple of weeks, this as the USD has turned stronger against many major currencies. The USD/INR essentially went from 82.1200 to its current price since the 15th of May. The Forex pair was trading near 81.6000 on the 4th of May. The temptation to sell the USD/INR the past couple of weeks has likely been strong as traders flirted with the notion technically that the currency would have to reignite its downwards path, but that clearly has not happened.

Today and the remainder of the week, the U.S has important risk events on the calendar. U.S Treasury Secretary Janet Yellen will be speaking and will certainly be asked to state her opinion on the debt ceiling talks. She will likely try to offer a neutral tone and not scare the financial markets. However, she can certainly be counted upon to say it is important to reach an agreement so the U.S can continue paying its financial obligations.

Perhaps more important than Treasury Yellen’s talk this afternoon, will be the U.S Federal Reserve’s FOMC Meeting Minutes publication later in the day. Financial institutions globally are nervous about the Fed’s interest rate outlook regarding its June Federal Funds Rate decision. Many analysts have predicted the U.S central bank will halt interest rate hikes and not increase on the 14th of June. Yet inflation data from the U.S remains problematic. Today’s FOMC Meeting Minutes text will provide insights regarding the Federal Reserve’s last meeting and give an inside look towards its leanings for a potential hike or pause.

USD/INR traders should also be aware that important Gross Domestic Product data will come tomorrow which will offer details regarding U.S growth. On Friday the U.S will release Core Personal Consumption Expenditure statistics and this will provide inflation results, and the outcome will certainly influence the U.S Federal Reserve’s June interest rate decision.


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