Indian Rupee recovers losses on lower oil prices, but risks remain on prolonged stalemate
FUNDAMENTAL OVERVIEW
USD:
The US dollar came under renewed pressure yesterday on heightened hopes for a US-Iran deal. The latest developments have certainly been more positive with Qatari mediation reportedly having produced a mutual understanding on Iran's frozen financial assets and Trump’s retreating on the nuclear material question.
In fact, having previously insisted that Iran's enriched uranium be shipped to the United States, Trump said on Truth Social that destruction in place under IAEA supervision, or transfer to a third country, would be acceptable.
What’s more important for traders is the reopening of the Strait of Hormuz. We are approaching the June FOMC meeting, and after Fed’s Waller speech on Friday, it’s now almost assured that the Fed is going to abandon the easing bias. If nothing changes before then, we might have a more hawkish than expected decision which is going to reverberate across the markets.
Therefore, in the short-term, a resolution and the reopening of the Strait will likely weigh on the greenback on falling oil prices and increased rate cut bets. But if the Strait remains closed for longer and oil prices stay elevated, the risk of the Fed being forced to hike anyway increases.
INR:
On the INR side, the optimism about a US-Iran deal since the final part of last week has extended and provided support to the Rupee as oil prices fell to monthly lows.
In the short-term, the Rupee has been closely correlated with oil prices, so positive developments on the US-Iran front should keep giving the INR a boost. Conversely, extended stalemate or further escalations will likely keep weighing on the currency and push it into new record lows.
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 the USD/INR pair into new highs.
USDINR TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDINR is approaching the trendline around the 95.50 level. If the price gets there, we can expect the buyers to step in with a defined risk below the trendline to position for a rally into new record highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 94.00 handle next.
USDINR TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have a minor downward trendline defining the current bearish momentum. The sellers will likely continue to lean on the trendline with a defined risk above it to keep pushing into new lower. The buyers, on the other hand, will want to see the price breaking higher 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 we can add here. The buyers will look for long opportunities around the major trendline or on the break above the minor downward trendline. The sellers, on the other hand, will look for short opportunities around the minor downward trendline or on the break below the major trendline.
UPCOMING CATALYSTS
Today, we have the US Consumer Confidence report. On Thursday, we get the latest US Jobless Claims figures and the US PCE price index.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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