FUNDAMENTAL
OVERVIEW
USD:
The US
dollar strengthened a bit yesterday as traders turned more cautious heading
into the expected US-Iran talks in Islamabad and the ceasefire deadline. The
markets got scared at some point as it looked like the Islamabad talks were
dead on arrival with Iran refusing to participate until the US blockade in the
Strait of Hormuz was lifted.
The
sentiment improved though after Trump extended the ceasefire deadline
(unsurprisingly) to allow more time for Tehran to put forward a proposal to end
the war. There’s no deadline for this latest extension, so we might just get
stuck in this new situation until the bombs start dropping again or they
finally reach a deal.
This
morning, the sentiment is a bit more positive after Tasnim reported that Iran received ‘some sign’ the US is ready
to break the blockade which is giving traders hope that the talks are going to
happen soon.
The price
action continues to be driven by US-Iran headlines, and this is unlikely to
change until we get an official resolution. For now, the greenback will likely
remain under pressure amid the optimistic expectations.
INR:
On the INR side,
nothing has changed. The Indian Rupee stabilised in the past couple of weeks as
the risk-on sentiment amid the US-Iran deal optimism gave the currency a
reprieve. The focus remains on US-Iran negotiations as everything hinges on
their outcome, although the renewed tensions are keeping the risk mood a bit on
the defensive.
In terms of macro,
the RBI held interest rates steady at 5.25% and downgraded growth forecasts due
to the US-Iran war at the last policy meeting. 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 pulled all the way back to the upper bound of the channel. This is
where we can expect the buyers to step in with a defined risk above the channel
to position for a drop into the lower bound of the channel. The buyers, on the
other hand, will look for a breakout to pile in for a rally into a new record
high.
USDINR TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
USDINR – 4 hour
On the 4 hour
chart, we have a strong resistance around the 94.00 handle. Again, we can
expect the sellers to step in here to target the lower bound of the channel,
while the buyers will look for a break to increase the bullish bets into new
highs.
USDINR TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
USDINR – 1 hour
On the 1 hour
chart, we have an upward trendline defining the bullish momentum. The buyers
will likely continue to lean on the trendline to keep pushing into new highs,
while the sellers will look for a break to increase the bearish bets into new
lows.
UPCOMING CATALYSTS
Tomorrow we get the latest US Jobless Claims figures and the US PMIs. The focus
remains on US-Iran headlines.
