The Indian Rupee risks falling into new record lows amid the renewed US-Iran conflict and elevated oil prices
FUNDAMENTAL
OVERVIEW
USD:
The US dollar has been under pressure in the past few days following the
surprisingly soft US inflation figures. The data triggered a dovish repricing
in interest rate expectations with traders scaling back significantly the
probabilities for a rate hike in July which is now comfortably off the
table.
The Fed is now expected to raise interest rates in October at the earliest
with a fully priced hike in December. The US-Iran crisis in the background is
keeping inflation risks skewed to the upside, so the downside in the greenback
should remain limited without a clear de-escalation.
INR:
On the INR side, the
Rupee has been under pressure after the US-Iran crisis erupted and oil prices
started to surge.
This pressure is
likely to persist the longer the conflict drags on. The Rupee will need a clear
de-escalation to trigger a relief rally and erase the recent losses.
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 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 USDINRbroke above the key resistance zone around the 96.10 level and
extended the buyers increase the bullish bets targeting new record highs. If we
get a pullback, we can expect the buyers to lean on the trendline and the old
resistance-turned-support to keep pushing into new highs. The sellers, on the
other hand, will want to see the price breaking below the trendline to open the
door for a drop into the 94.00 handle next.
USDINR TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour
chart, we have another 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. The sellers, on the other
hand, will want to see the price breaking lower to extend the pullback into the
96.10 support next.
USDINR TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour
chart, there’s not much we can add here as the buyers will have better risk to
reward setups around the trendline to keep targeting new highs, while the
sellers will need downside breaks to push into new lows.
UPCOMING CATALYSTS
Today, we conclude the
week with the University of Michigan Consumer Sentiment survey, but the focus
will remain on US-Iran headlines.
See also GBP/USD technical analysis for beginners from today (including video)
This article was written by Giuseppe Dellamotta at investinglive.com.