USD/INR forecast: May 2022
USD/INR ended April holding bullish gains made in choppy conditions, and in early May Indian Rupee traders will face a tough test.
USD/INR enters May after holding onto bullish gains, but showing signs of a slight technical selloff. Traders should be prepared for the potential for a bumpy week ahead with USD/INR as the US Federal Reserve announces its key interest rate next Wednesday. The Fed is expected to raise interest rates by half a basis point, meaning an additional 0.50% will be added to the current rate.
The US central bank let the financial world know its thinking in advance. What day traders need to understand is that many of the “stronger” USD results, which are reasonable notions, have probably already been “integrated” into the USD/INR results. This means the USD was bought assuming US interest rates rise. This evokes the age-old idea among marketers that rumor should be bought and fact should be sold.
Some technical traders may not want to know what the US Fed is doing and despise all central bank statements, but it can be a good idea to have some knowledge of fundamentals. If in fact the trading adage of “selling the fact” occurs when the US Federal Reserve formalizes its interest rate hike, USD/IND is likely to see a significant amount of fast and volatile trading. Speculators with limited amounts of money who cannot afford to bet in the expected choppy conditions should be extremely cautious at the start of the week.
Technically, financial institutions still have a few trading days to position their holdings in USD/INR before the US Fed makes its announcements. This will likely set the stage for choppy conditions in the coming days. A high near 76.7800 was seen on the 26thand From April. It would not be surprising to see this brand challenged again in the short term. When the interest rate announcement comes from the US, traders should expect to see sudden spikes in both directions of USD/INR momentarily developing.
In March, USD/INR hit an all-time high near 77.1500, and some traders may wonder if these values will be reached again. This could certainly be the case and traders should use their risk taking tactics to guard against fast moves, and also to potentially profit from the use of take profit orders. If the US Fed does raise interest rates, talks about the possibility of another hike in the next two months, speculators should understand that this rhetoric has been widely anticipated by financial institutions trading USD/INR .
The perceived notions of things to come and the actual rhetoric will make for an intriguing week and month of trading for USD/INR. Speculators who have the ability to bet with USD/INR will certainly find a volatile range to profit from, but the price movement could also prove dangerous.
USD/INR Outlook for May 2022
The speculative price range for USD/INR is 75.2500 to 77.1600
If selling pressure builds on USD/INR in reaction to anticipated moves by the Federal Reserve, a price drop could break out. The 76.3000 level should be watched, if it proves vulnerable there is reason to suspect that the 76.0600 mark could be challenged and if this price neighborhood weakens USD/INR could break lower and head towards the 75.7500 ratio quite quickly. A move below 75.7500 could actually trigger further downside testing and depths of 75.4000 wouldn’t be completely surprising.
Turbulence within the USD/INR will certainly take place and buying surges will also likely be seen in the coming days as nervousness prevails. USD/INR spiked higher last week and held on to part of its higher price range. If buying pressure is demonstrated the 76.7000 level should be watched, if broken higher a test towards 76.9300 could be shown. Additional higher moves could be generated, but if that happens they will likely be momentary bursts. Traders are advised to use risk management with USD/INR.