FUNDAMENTAL
OVERVIEW
USD:
The US dollar came under some pressure in the final part of last week
following the US NFP report. The data wasn’t bad, but it was enough to trigger
a slightly dovish repricing in interest rate expectations. The chances for a
July hike are now standing at just 24%, while the probabilities for a move in
September dropped to 55%.
As mentioned previously, given the Fed’s focus on inflation, the US CPI
will likely be more important. For now, the US dollar might remain rangebound until
we get to the main event.
This week, we don’t have much on the agenda. We have Fed’s Waller speaking
today, but unless he explicitly endorses rate hikes, the price action should
remain rangebound. The other potential catalyst could be the FOMC meeting
minutes on Wednesday.
This is almost never a market moving report but given the limited forward
guidance from Fed Chair Warsh, traders will want to see if there’s any further
signal in the minutes on the next policy move.
INR:
On the INR side, the
Rupee decoupled from oil prices as the market focus shifted to the risk of Fed
rate hikes after the last FOMC decision.
The Rupee will
likely need a downside surprise in the US CPI next week to recover the losses.
An upside surprise could take the currency to a new record low versus the US
dollar.
In the big
picture, the Indian Rupee remains on a bearish structural trend against the US dollar,
so dip-buyers will continue to 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 broke above the downward trendline last week and extended the rally as
more buyers piled in on the breakout. The natural target should be the swing
high around the 96.10 level. 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 – 4 HOUR TIMEFRAME
USDINR – 4 hour
On the 4 hour
chart, we can see the price broke through a strong resistance zone around the
95.10 level where we had also the trendline for confluence. We have now an
upward trendline defining the bullish momentum. If we get a pullback, we can
expect the buyers to lean on the trendline with a defined risk below the old
resistance now turned support, to position for a rally into new record highs.
The sellers, on the other hand, will want to see the price falling back below
the 95.10 support to pile back in and target a drop into new lows.
USDINR TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
USDINR – 1 hour
On the 1 hour
chart, there’s not much we can add here as the buyers will have a better risk
to reward setup around the trendline and the 95.10 support, while the sellers
will have to either wait for the price to reach the 96.10 resistance or break
below the support.
UPCOMING CATALYSTS
Today, we get the US ISM
Services PMI. On Wednesday, we have the FOMC meeting minutes. On Thursday, we
get the latest US Jobless Claims figures.
