Date: June 6, 2023
Place: New Delhi, India
In the dynamic and ever-changing landscape of the currency markets on June 5, 2023, the Indian rupee (INR) showcased a diverse and intriguing performance when measured against major global currencies.
By delving deeper into each currency pair, we can gain valuable insights into the rupee’s performance and its impact on the broader financial landscape.
USDINR
The USDINR pair has been lacking a clear direction and displaying minimal discernible patterns. It continues to experience fluctuations within a broader range of 82.00 to 83.00. The absence of distinct support and resistance zones implies that the pair could reverse its course from any point within this 100-point range. Although there was persistent buying activity observed yesterday, its significance remains limited as the pair is expected to open with a downward gap around the 82.50/53 level. In range-bound markets, price gaps often tend to be filled. Hence, it would not be surprising if USDINR attempts to bridge the gap between the 82.25 and 82.45 levels.
Considering potential strategies, there are two options to consider. Intraday scalpers could contemplate taking contrarian positions if USDINR moves by 20/25 paise or more in a single direction. Although this strategy did not generate profits yesterday, it has generally proven effective. While prices lack a definitive trend, employing mean reversion strategies remains sensible. Additionally, short-option strategies such as a short straddle or strangle can be considered.
However, it is advisable to opt for hedged strategies like the iron fly, as they can withstand intra-week movements of 30/40 paise without triggering stops. Support levels can be found near 82.45 and 82.25, while resistance levels are situated near 82.70 and 82.85 on the spot.
GBPINR
The GBPINR pair remains range-bound with a bias towards this range: 102.55 to 103.05. The US Dollar Index witnessed a reversal and subsequently triggered a rally in GBPUSD due to the release of underwhelming services PMI data. The US services sector experienced minimal growth in May, primarily attributed to a slowdown in new orders.
The ISM non-manufacturing PMI decreased from 51.9 in April to 50.3 last month. A reading above 50 indicates expansion in the services industry, which contributes to over two-thirds of the US economy. Resistance levels are anticipated around the 1.2460/80 zone for GBPUSD, while GBPINR is expected to face resistance near the 103.05/130.25 levels. On the other hand, support levels are projected around 102.50/55. GBPINR has traded within a range of 102.00 to 103.30 over the past three weeks.
EURINR
The European Central Bank is anticipated to implement multiple interest rate hikes to address inflation, as per comments from Bundesbank President Joachim Nagel. However, it remains uncertain whether rates will reach their highest point this summer, challenging prevailing market expectations of a deposit rate peak at 3.75% in July, followed by a decline next year.
Following the release of US NFP data on Friday, EURUSD staged a recovery overnight, reclaiming half of the earlier losses. Nevertheless, the pair is expected to face significant resistance in the 1.0720/40 range. Consequently, EURINR futures in June are likely to experience price movement within the range of 88.45 and 88.85, indicating a rangebound pattern.
JPYINR
Following a decline in US bond yields and a day of losses in US stocks, USDJPY saw a significant 100-pip drop from its peak at 140.50. On the other hand, JPYINR started its trading session on a higher note and is expected to demonstrate a positive inclination within a broader range of 59.35 to 59.75 in the futures market.
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