FUNDAMENTAL
\nOVERVIEW<\/p>\n
USD:<\/p>\n
The US dollar regained some ground this week as US and Iran rejected the
\nrespective war-ending proposals and US inflation data came out higher than
\nexpected. Overall, the market remains rangebound as traders continue to wait
\nfor new developments before picking a direction. <\/p>\n
Looking ahead, the Fed is slowly abandoning the easing bias with more and
\nmore policymakers talking about the need of keeping all options on the table
\nand some explicitly bringing up rate hikes. <\/p>\n
The reopening of the Strait could weigh on the greenback in the short-term
\nas oil prices will likely fall quickly and rate cut bets will increase on
\neasing inflation worries.<\/p>\n
After that though, the focus will quickly turn back to the Fed and the
\neconomic data. With the end of the war, the increase in economic activity could
\nkeep inflation higher for longer and eventually even require rate hikes to
\nbring it sustainably back to the 2% target that the Fed has been missing since
\n2021.<\/p>\n
There\u2019s also another scenario where the Strait remains closed for longer
\nand oil prices stay elevated, with the risk that the Fed turns hawkish anyway
\nand gives the greenback a strong boost given the bearish positioning on the
\ndollar. <\/p>\n
INR:<\/p>\n
On the INR side, the
\nlack of any US-Iran breakthrough and a rebound in oil prices continued to weigh
\non the Indian Rupee which dropped to a new record low against the dollar this
\nweek. <\/p>\n
In the short-term,
\nthe Rupee has been closely correlated with oil prices, so positive developments
\non the US-Iran front should keep giving the INR a boost. Conversely, extended
\nstalemate or further escalations will likely keep weighing on the currency and
\npush it into new record lows. <\/p>\n
In the big
\npicture, the Indian Rupee remains on a bearish structural trend against the US dollar,
\nso the dip-buyers will likely look for opportunities around strong technical
\nlevels to keep pushing into new highs. <\/p>\n
USDINR TECHNICAL
\nANALYSIS \u2013 DAILY TIMEFRAME<\/p>\n
USDINR – daily<\/p>\n