FUNDAMENTAL
OVERVIEW
USD:
The US
dollar sold off across the board on Wednesday after Trump announced on Truth
Social a two-sided ceasefire agreement for two weeks while the US and Iran
negotiate a lasting peace deal. Since then, the price action became more
rangebound due to Israeli attacks against Lebanon which the Iranians have been
saying was part of the ceasefire agreement.
The good
news is that Iran held off from retaliating ahead of the peace talks in
Islamabad this weekend. But the uncertainty has been keeping the markets in
check, nonetheless. Everything hinges on these peace talks as the restart of
the war would create strong distress in the markets and potentially lead to a
global recession.
In the
short-term, a peace deal would weigh on the greenback amid renewed rate cut
bets and unwinding of the March positioning. On the other hand, a breakdown of
negotiations would give the dollar another boost, potentially pushing it into
new highs.
INR:
The Indian rupee has
finally found some reprieve recently after the ceasefire announcement, although
that hasn’t completely erased the risks as the focus has now turned to the
US-Iran peace talks.
The RBI this week held
interest rates steady at 5.25% and downgraded growth forecasts due to the
US-Iran war. In fact, the central bank expects inflation to increase in the
short-term and growth to slow down.
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, but for now the Rupee could remain
supported and extend the relief rally in case the US-Iran war ends.
USDINR TECHNICAL
ANALYSIS – DAILY TIMEFRAME
USDINR – daily
On the daily
chart, we can see that USDINR fell below the upper bound of the channel opening the door for a
bigger correction. The sellers are stepping in around the top trendline to
extend the drop into the lower bound of the channel. The buyers, on the other
hand, will want to see the price rising back above the top trendline to
increase the bullish bets into new highs.
USDINR
TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
USDINR – 4 hour
On the 4 hour
chart, we can see more clearly how the price rejected the upper bound of the
channel as the sellers stepped in with a defined risk above the channel to
extend the drop into new lows. The buyers will likely wait for a break higher
to regain control and target new highs.
USDINR TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
USDINR – 1 hour
On the 1 hour
chart, we can see the price action has been a real mess lately with lots of
interventions and gaps. Right now, we might be trading inside a falling channel
with the price rejecting the upper bound of it. We have a minor support zone
around the 93.30 level.
The buyers will
likely step in around the support to position for a rally into new highs,
although a break above the channel would give them more conviction. The
sellers, on the other hand, will look for a break below the support to increase
the bearish bets into new lows.
UPCOMING CATALYSTS
Today we conclude the week with the US CPI report and the University of
Michigan Consumer Sentiment survey.
