KEY POINTS:
- Suspected RBI intervention boosted the Indian Rupee
- India’s central bank actions not enough to stop the INR depreciation
- Renewed tensions on the tariffs front remain a negative for the Rupee
- US dollar bounces around as traders await the US NFP report on Friday
FUNDAMENTAL
OVERVIEW
USD:
The US
dollar has been bouncing around in the past couple of days as traders continue
to wait for the US NFP report on Friday. The latest NFP and CPI
reports came both on the softer side and the market is still pricing 62 bps of
easing by year-end. The data in December was taken with a pinch of salt given
the shutdown related issues, but the next releases will give us a clearer
picture.
The market
expects the Fed to cut in March at the earliest, so we will need very soft data
this month to force them to act sooner. Nonetheless, if the data continues to
come in on the softer side, the market will likely increase the total easing
for 2026 and that should continue to weigh on the US dollar.
On the
other hand, if the data strengthens, traders will likely pare back their rate
cut bets and that will likely offer the greenback some support.
INR:
The Indian Rupee jumped
today following a suspected
RBI intervention. The Indian central bank has been intervening more
frequently recently but the bearish pressure on the Rupee is expected to remain
due to structural headwinds.
On Monday, Trump threatened more tariffs on India “if they don’t help on Russian oil
issue”, so the tensions on the trade front continue to be a negative for the currency.
USDINR TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily
chart, we can see that the price couldn’t extend the rally into the key 90.40
level as RBI’s intervention pushed the pair lower. Nevertheless, the upside should
remain intact, and the buyers will likely step back in around the 89.70 area
where we can find a strong support and the lower bound of the rising channel.
The sellers, on the other hand, will need the price to break out of the channel
to extend the drop into the 88.90 level next.
USDINR TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour
chart, we can see more clearly the strong push lower today following the
suspected RBI intervention. Again, the buyers will likely step in around the
89.70 support zone with a defined risk below the lower bound of the channel to
position for a rally into the 92.00 handle. Tomorrow, we get the latest US Jobless Claims figures
