FUNDAMENTAL
OVERVIEW
USD:
The US dollar weakened across the board again yesterday following several
positive news on the US-Iran front. The pause was of course interpreted as another step towards a
deal.
Looking ahead, 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
positive news on the US-Iran front offered some reprieve for the Indian Rupee as
the risk sentiment improved on expectations that the war ends and the Strait of
Hormuz gets finally reopened.
In the short-term,
the Rupee should remain supported as long as the optimism remains intact, but
if things go south again, we can expect another selloff into new record lows.
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 dropped significantly from the all-time highs following the positive
US-Iran news. The price briefly fell below the upper bound of the channel today,
but eventually bounced back above it. The sellers will want to see the price
falling back below the upper bound to increase the bearish bets into the 92.60
level next. The buyers, on the other hand, will likely continue to pile in
around the upper bound to keep pushing into new record highs.
USDINR TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour
chart, we can see that the sellers piled in on the break below the minor upward
trendline to target a pullback into the upper bound of the channel with the
positive US-Iran news eventually providing the boost. There’s not much else we
can glean from this timeframe, so we need to zoom in to see some more details.
USDINR TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour
chart, we now have a minor downward trendline that could act as resistance. If
we get a pullback, we can expect the sellers to lean on the trendline with a
defined risk above it to position for a drop into the 92.60 level next
