KEY POINTS:
- USDINR reaches a new record high as the bearish INR trend persists
- The pair rallied into a key resistance zone where we have the 91.00 handle and the upper bound of the channel
- USD remains weak against major currencies
- India's Flash PMIs ease further
- All eyes on the US NFP report today
FUNDAMENTAL OVERVIEW
USD:
The USD has been weakening against all the major currencies since last week’s FOMC decision. The Fed delivered on expectations cutting by 25 bps and signalling a higher bar for further rate cuts, but Fed Chair Powell’s press conference was seen as fairly dovish.
In fact, instead of sounding as neutral as possible and stressing data-dependency, he downplayed the inflation risk and emphasized the labour market weakness, suggesting that there’s more tolerance for higher inflation than for weaker labour market.
The focus has now shifted to the US NFP and CPI reports that will wrap up the last real trading week of the year before market participants prepare for the holidays. Right now, the market is pricing 58 bps of easing by the end of 2026.
If we get strong US data, especially on the labour market side, we will likely see a hawkish repricing which should give the US dollar a boost. On the other hand, weak data should weigh on the greenback further as the market will bring rate cut bets forward.
INR:
Despite the general USD weakness, the INR continues to drop into record lows against the greenback as the structural headwinds keep the pair in a bullish trend. In fact, from a risk management perspective, it’s better to just look for dip-buying opportunities instead of trying to time the tops.
The US-India trade talks went well but we haven’t got any major breakthrough, and the expectations are now that a deal could be reached by April 2026.
The India’s Flash PMIs today eased once again to the lowest reading since February due to softer growth. Price pressures were also seen muted, which might keep weighing on the INR as the RBI could still cut rates further at the next meeting.
USDINR TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDINR has finally reached the upper bound of the rising channel around the 91.00 handle.
This is where we can expect the sellers to step in with a defined risk above the highs to position for a pullback 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 can see that the bullish momentum stalled around the 91.00 handle as the sellers started to pile in. We can see that we have another minor upward trendline inside the channel that could act as support.
If the price gets to 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 lower bound of the channel.
USDINR TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see that we have yet another minor trendline defining the bullish momentum on this timeframe.
From a risk management perspective, the buyers will have a better risk to reward setup around the trendline, so they can have a defined risk below the trendline to position for a rally into new highs.
The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 90.40 level next.
UPCOMING CATALYSTS
Today we have the US NFP report. On Thursday, we get the US CPI data.
