KEY POINTS:
- USDINR continues to consolidate below a key resistance around the 90.40 level
- The RBI intervention paused the selloff in the Indian Rupee
- The main trend remains to the upside
- In the short-term, traders will look for technical breaks
FUNDAMENTAL OVERVIEW
USD:
The US CPI yesterday surprised to the downside across the board, but as we’ve seen with the NFP report, the market took the data with a pinch of salt. The dollar weakened following the CPI release but eventually recovered all the losses and strengthened across the board.
It should also be noted that we got the US Jobless Claims yesterday and the data was strong. The Initial Claims remain around the same low levels we got used to for years, but Continuing Claims dropped to the lowest level since May.
The next NFP report won’t have the shutdown related issues, so we will get a clearer view of the US labour market conditions. For now, I’d say the greenback is kind of neutral, although skewed to the downside a bit.
INR:
The RBI intervened this week to stop the recent selloff in the Indian Rupee. The last intervention was in October, but as it usually happens when the fundamentals remain against a currency, the INR eventually fell to new lows.
We can expect the Rupee to weaken again in the next months, but in the short-term, traders will look for key technical breaks before piling into USDINR longs again.
USDINR TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDINR sold off from the upper bound of the rising channel following the RBI’s intervention. The natural target for the sellers remains the lower bound of the channel around the 89.00 level, but they will need to keep the price below the key zones. The buyers, on the other hand, will continue to step in around the key levels to keep targeting new record highs.
USDINR TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see that we have a strong resistance around the 90.40 level. The sellers continue to step in there with a defined risk above the level to position for a drop into the 89.70 level next. The buyers, on the other hand, will want to see the price rising above the 90.40 level to pile in for a rally into new all-time highs.
USDINR TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s not much else we can add here as the sellers will likely continue to step in around the resistance to target new lows, while the buyers will look for a break higher to position for a rally into a new record high.
