FUNDAMENTAL
OVERVIEW
USD:
The US dollar started the week on a positive note following rising tensions
in the Strait of Hormuz. Yesterday, we got reports and denials about Iran
firing on US ships in the Strait which gave the greenback a boost.
Trump said the US sank 6 Iranian fast boats while Iran denied it. Iran also
launched a surprise attack against the UAE oil route that bypasses the Strait
of Hormuz in Fujairah. This latest escalation is likely to keep the US dollar
supported as the risk sentiment stays more on the defensive.
Trump has played things down for now, but the situation could worsen
quickly. Overall, we are now in a consolidation phase as we await the next key
development in this US-Iran stalemate.
The Fed is slowly abandoning the easing bias amid resilient US data and
elevated energy prices. The reopening of the Strait could weigh on the
greenback in the short-term as oil prices will likely crater and rate cut bets
will increase.
After that though, the focus will quickly turn back to the Fed and the
economic data. With the end of the war, the increase in economic activity could
keep inflation higher for longer and eventually even require rate hikes to
bring it sustainably back to the 2% target that the Fed has been missing since
2021.
INR:
On the INR side, the
US-Iran stalemate and rising tensions in the Strait of Hormuz keep weighing on
the currency as the Indian Rupee now flirts with new record lows against the
greenback.
The INR will
likely remain under pressure as long as the situation in the Strait of Hormuz
remains unresolved.
In the big
picture, the Indian Rupee remains on a bearish structural trend against the US dollar,
so the dip-buyers will likely look for opportunities around strong technical
levels to keep pushing into new highs.
USDINR TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily
chart, we can see that USDINR has now basically reached the March high around the 96.00 handle.
This is where we can expect the sellers to step in with a defined risk above
the high to position for a drop back into the upper bound of the channel. The
buyers, on the other hand, will look for a break to increase the bullish bets
into new highs.
USDINR TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour
chart, we have an upward trendline defining the current momentum. We can expect
the buyers to continue to lean on the trendline with a defined risk below it to
keep pushing into new highs. On Thursday, we get the latest US Jobless
Claims figures. On Friday, we conclude the week with the US NFP report and
University of Michigan Consumer Sentiment survey
