FUNDAMENTAL
OVERVIEW
USD:
The US dollar spiked
to the upside on Friday after the strong US NFP reportbut the gains didn’t last as most of the NFP-driven moves got faded
thereafter.
This happened
because the market focus was not on the NFP report, but on the CPI. The market
pays attention to the data that the central bank is focused on, and the Federal
Reserve is currently focused on inflation.
In fact, just a
day before the NFP report, Fed’s Waller mentioned that he would support keeping
interest rates unchanged at the upcoming FOMC meeting, but a hot CPI would make
him consider a rate hike.
That’s why traders are focused on the CPI
report on Friday. Unless, we get some surprising breakthrough in US-Iran
relations, the price action will likely remain mostly rangebound or a bit
positive for the greenback as traders at some point might start hedging into
the CPI release.
A soft or in-line CPI will likely weaken
the dollar as Fed’s Waller mentioned that he won’t consider a rate
hike unless we get a hot CPI.
Conversely, an upside surprise in core monthly inflation data will likely
trigger another rally on a hawkish repricing.
INR:
On the INR side, the
currency has been completely detached from reality in the past week, as it
rallied despite another increase in oil prices and a relatively stable US
dollar. This might have been the result of a series of RBI’s interventions, as
we saw three strong spikes without any positive catalyst for the rupee.
This week, those
rupee gains are being faded as intervention-driven moves rarely last without a change
in fundamentals. Oil prices have been rising steadily, and we have the US CPI risk
on the horizon. Both are negative drivers for the rupee.
In the short-term,
the INR will continue to be driven by oil prices and the hawkish/dovish
repricing in Fed interest rate expectations. Therefore, the pair might keep
trading in the wide range for longer until the US and Iran find an agreement
and the Strait of Hormuz is reopened.
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 major technical
levels to keep pushing the USD/INR pair into new highs.
USDINR TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily
chart, we can see that USDINRerased most of the RBI intervention driven moves and it’s now
approaching the major downward trendline. We can expect the sellers to lean on
the trendline with a defined risk above it to position for a drop into the
94.00 handle. The buyers, on the other hand, will want to see the price
breaking higher to increase the bullish bets into the 96.10 resistance next.
USDINR TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour
chart, we have an upward trendline now defining the bullish momentum. If we get
a pullback into it, we can expect the buyers to lean on the trendline 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 increase the bearish bets into the 94.00
handle.
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 continue to 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 drop into the 4-hour trendline.
UPCOMING CATALYSTS
Tomorrow, we get the
US PPI report and the US Jobless Claims figures. On Friday, we conclude the
week with the US CPI report. US-Iran developments will also be key for the
Indian Rupee as it continues to be driven mainly by oil prices.
This article was written by Giuseppe Dellamotta at investinglive.com.