- The US dollar has been all over the place during the trading session on Tuesday as we continue to pay close attention to the 87.50 rupee level as it has been a short term double top.
- If we can break above there then the market goes looking to the 88 level and I think that is an area that you will have to be very cautious about.
- If we can break above there, then the US dollar will continue to go much higher.
Short-term pullbacks at this point in time should continue to be buying opportunities though, due to the fact that we have seen a lot of buying pressure in the past. And I do think that the 87 rupee level will be an area a lot of people watch. Below there, the 86.50 rupee level is likely to be the floor, if you will, as it's been important multiple times.
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Furthermore, the 50 day EMA is in that general vicinity as well. So that gives us yet another reason to think that perhaps the US dollar will find a floor there. Anything below that air area right there, then it could be rather ugly. In general, I think this is a situation where you are still buying the dip. And the US dollar, of course, will continue to be looked at as a safer currency in what looks to be a slowing global economy in various places. With this, I'd be very careful about shorting this pair, but I also recognize that it is probably going to be very choppy. And of course, the Indian Central Bank doesn't let it free flow like other pairs like the British pound or the euro against the dollar. It's a little bit more controlled market.
It has been an extraordinarily positive move since June of last year. So, somebody somewhere has made a fortune in this pair, but right now we are trying to digest those gains and that could very well mean that we need to go sideways for a while between 86.50 and 87.50.
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