FUNDAMENTAL
OVERVIEW
USD:
The US dollar came under renewed pressure yesterday on heightened hopes for
a US-Iran deal. The latest developments have certainly been more positive with Qatari
mediation reportedly having produced a mutual understanding on Iran’s frozen
financial assets and Trump’s retreating on the nuclear material question.
In fact, having previously insisted that Iran’s enriched uranium be shipped
to the United States, Trump said on Truth Social that destruction in place
under IAEA supervision, or transfer to a third country, would be acceptable.
What’s more important for traders is the reopening of the Strait of Hormuz.
We are approaching the June FOMC meeting, and after Fed’s Waller speech on
Friday, it’s now almost assured that the Fed is going to abandon the easing
bias. If nothing changes before then, we might have a more hawkish than
expected decision which is going to reverberate across the markets.
Therefore, in the short-term, a resolution and the reopening of the Strait
will likely weigh on the greenback on falling oil prices and increased rate cut
bets. But if the Strait remains closed for longer and oil prices stay elevated,
the risk of the Fed being forced to hike anyway increases.
INR:
On the INR side, the
optimism about a US-Iran deal since the final part of last week has extended
and provided support to the Rupee as oil prices fell to monthly lows.
In the short-term,
the Rupee has been closely correlated with oil prices, so positive developments
on the US-Iran front should keep giving the INR a boost. Conversely, extended
stalemate or further escalations will likely keep weighing on the currency and
push it 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 the USD/INR pair into new highs.
USDINR TECHNICAL
ANALYSIS – DAILY TIMEFRAME
USDINR – daily
On the daily
chart, we can see that USDINR is approaching the trendline around the 95.50 level. If the price
gets there, we can expect the buyers to step in with a defined risk below the
trendline to position for a rally into new record highs. The sellers, on the
other hand, will want to see the price breaking lower to increase the bearish
bets into the 94.00 handle next.
USDINR TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
USDINR – 4 hour
On the 4 hour
chart, we have a minor downward trendline defining the current bearish momentum.
The sellers will likely continue to lean on the trendline with a defined risk above
it to keep pushing into new lower. The buyers, on the other hand, will want to
see the price breaking higher to pile in for a rally into new all-time highs.
USDINR TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
USDINR – 1 hour
On the 1 hour
chart, there’s not much we can add here. The buyers will look for long
opportunities around the major trendline or on the break above the minor
downward trendline. The sellers, on the other hand, will look for short
opportunities around the minor downward trendline or on the break below the
major trendline.
UPCOMING CATALYSTS
Today, we have the US
Consumer Confidence report. On Thursday, we get the latest US Jobless Claims
figures and the US PCE price index.
