FUNDAMENTAL
OVERVIEW
USD:
The US
dollar opened higher today after Israel bombed 30 Iranian fuel depots on Saturday and
oil prices surged above 100$ per barrel. The greenback continues to be
supported on safe haven demand and the hawkish repricing in interest rate
expectations as traders pare back the Fed rate cut bets.
The weak
NFP report on Friday was basically ignored as the market focus remains on the
US-Iran war. The NFP was also completely the opposite of what the other jobs
data have been pointing to, so it’s hard to trust it.
Traders
are now laser focused on de-escalation as that would trigger a strong relief
rally in risk assets which is likely to weigh on the US Dollar. Trump said on Truth Social that oil prices
will drop rapidly when the destruction of the Iran nuclear threat is over.
Reading
between the lines it means that once they declare that the nuclear threat is
over or that they reached all their goals, it would mark the start of
de-escalation and the market will react to it.
INR:
In the big
picture, the Indian Rupee remains on a bearish structural trend against the US dollar.
Lat week, the bearish momentum increased substantially due to strong risk
aversion in the markets amid the US-Iran war. The RBI intervened after the
Rupee tumbled to new record lows, but the central bank’s action was once again
useless as the currency sank to another record low today.
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, we have an upward trendline defining the bullish momentum. If we get a
pullback into the trendline, we can expect the buyers to lean on it with a
defined risk below it to keep pushing into new highs. The sellers, on the other
hand, will look for a break lower to extend the pullback into the lower bound
of the channel.
USDINR TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour
chart, we have another minor upward trendline defining the bullish momentum on
this timeframe. The buyers will likely lean on the trendline with a defined
risk below it to keep pushing into new highs, while the sellers will look for a
break to extend the pullback into the next trendline around the 91.00 handle.
UPCOMING CATALYSTS
On Wednesday we have the US CPI report. On Thursday, we get Indian
CPI report and the latest US Jobless Claims figures. On Friday, we conclude the
week with the US PCE price index, the University of Michigan Consumer Sentiment
survey and the Job Openings data. As a reminder, the market focus right now is
solely on the US-Iran war, so the data might not matter much.
This article was written by Giuseppe Dellamotta at investinglive.com.
