FUNDAMENTAL OVERVIEW
USD:
The US dollar regained some ground to start the week as the prolonged US-Iran stalemate has taken oil prices back into triple digit levels.
That looks unlikely to change anytime soon as Trump has rejected Iran’s proposal to first open the Strait of Hormuz and then hold nuclear talks. Unfortunately, with US stock prices at all-time highs Trump might not feel any pressure to concede.
This might even set the stage for the next US dollar rally if the Strait of Hormuz remains closed for much longer and oil prices stay elevated, thus forcing the Fed to hike interest rates in the coming months.
Today, we have the FOMC policy decision and although the Fed is expected to keep everything unchanged amid the US-Iran uncertainty, there’s a risk of a more hawkish leaning due to resilient US data and a longer than expected US-Iran war. A neutral Fed shouldn’t bring much volatility, but a more hawkish one could give the greenback a boost.
INR:
On the INR side, the US-Iran stalemate led to another selloff with the Indian Rupee erasing all the gains since the start of the month and now approaching the record lows. The currency will likely remain under pressure as long as the situation in the Strait of Hormuz remains unresolved.
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 into new highs.
USDINR TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDINR extended the gains yesterday on broad US dollar strength. The natural target for the buyers is the all-time high around the 96.00 handle. If the price gets there, we can expect the sellers to step in with a defined risk above the level to position for a drop back into the 94.00 level. The buyers, on the other hand, will look for a break to increase the bullish bets into new record highs.
USDINR TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have an upward trendline defining the current bullish momentum. We can expect the buyers to continue 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 to pile in and target a drop back into the 94.00 support.
USDINR TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s not much we can add here as the buyers will likely continue to lean on the trendline to keep pushing into new highs, while the sellers will wait for a break to open the door for new lows.
UPCOMING CATALYSTS
Today we have the FOMC policy decision. Tomorrow, we get the US Q1 GDP, the US Employment Cost Index and the latest US Jobless Claims figures. On Friday, we conclude the week with the US ISM Manufacturing PMI.
