FUNDAMENTAL
OVERVIEW
USD:
The US
dollar skyrocketed in the final part of last week as prospects of a quick end
to the war faded and oil resumed the rally towards triple digit levels. Traders
continue to price out the rate cut bets amid surging energy prices.
On
Wednesday, we have the FOMC policy decision where the central bank is expected
to keep interest rates unchanged with Miran, Waller and Bowman likely
dissenting in favour of a rate cut. At this meeting, we will also get the
Summary of Economic Projections and the Dot Plot.
The Fed is
likely to revise growth forecasts lower, while upgrading inflation estimates.
The median Dot Plot should remain unchanged with one rate cut expected by
year-end. Overall, the central bank is likely to stress patience amid the
US-Iran war but maintain an easing bias.
INR:
In the big
picture, the Indian Rupee remains on a bearish structural trend against the US dollar.
More recently, the bearish momentum increased due to risk aversion in the
markets amid the US-Iran war.
The longer this
war drags on, the greater the negative impact will be on the global economy.
This would keep the USDINR underpinned into new record highs.
A de-escalation
could give the INR a boost in the short-term which will likely be a good
opportunity for traders to buy the dip in the USDINR pair as the main uptrend
will likely remain intact.
USDINR TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily
chart, we can see that USDINR is approaching the upper bound of the rising channel. If the price
gets there, we can expect the sellers to step in with a defined risk above the
top trendline to position for a drop back into the lower bound of the channel.
The buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into new highs.
USDINR TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour
chart, the recent price action formed a rising wedge pattern. This is generally
a signal of weakening momentum. The buyers will likely lean on the bottom trendline
with a defined risk below it to keep pushing into the upper bound of the
channel. The sellers, on the other hand, will look for a break lower to pile in
for a drop into the 91.63 level next.
USDINR
TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
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 bottom trendline, while the sellers will look for a
breakout to open the door for new lows. A break above the top trendline though,
could increase the bullish momentum following the recent wedge-type consolidation.
In that case, we can expect the buyers to pile in to ride the rally into the
upper bound of the channel.
UPCOMING CATALYSTS
On Wednesday we have the US PPI report and the FOMC policy decision. On Thursday,
we get the latest US Jobless Claims figures. The focus remains on the US-Iran
war, so keep an eye on the headlines, especially those regarding the Strait of
Hormuz.
This article was written by Giuseppe Dellamotta at investinglive.com.
