FxWirePro: INR likely to weaken against USD; Option sentiment flips

INR Bull Run might be over,

• Since mid-February INR strengthened from 71.5 per USD to as high as 68.4 per USD. The exchange rate is currently at 69.
• The options market is suggesting that the bull-run in INR might be over, at least for the time being. The options market sentiment has flipped for the first time since early February. The put-call ratio (PCR), which is one of the most popular option market indicators is currently at 1.03, suggesting retail traders are now biased towards further downside in USD/INR, which gives the pair a bullish bias. The PCR has shifted from 0.8 earlier this week to above 1, as of today.
• However, the sentiment could be skewed for the day, due to major expiry in USD/INR options. Hence, it would be advisable to watch out for the sentiment tomorrow, when there are no expiries.

In addition to the sentiment bias,

• USDINR cash market price actions have formed a bullish hammer candle last week, while future formed a bullish ‘Dragon-fly’ Doji candle in the weekly chart, which once again gives the USD/INR bullish bias.
• We expect the Indian rupee (INR) to weaken and test the 70 per USD resistance area in the coming days.