USDINR Technical Analysis: RBI intervenes to stop the Rupee selloff. Another failed try?

KEY POINTS:

• The RBI decided to intervene after the recent selloff in the Indian Rupee
• The US unemployment rate surprised to the upside
• USDINR remains skewed to the upside, buyers will look for key technical breaks
• US CPI coming up tomorrow

FUNDAMENTAL OVERVIEW

USD:

We finally got the most
recent US
jobs report yesterday, and the data surprised to the downside. In fact,
despite the headline number slightly beating expectations, the more important
unemployment rate jumped to 4.6% vs 4.4% prior.

There were some positives
as the permanent job losers rate was a bit lower, but the main takeaway is that
the trend remains to the upside and that the unemployment rate was higher than
the Fed’s year-end forecast.

Fed Chair Powell made it
pretty clear in his last press conference that they are more focused on the
labour market weakness, and they can tolerate some higher inflation given the
transitory expectations.

This suggests that we could
see another rate cut sooner than expected. The market might start to price that
in with more conviction if tomorrow’s US CPI data doesn’t overshoot.

INR:

The RBI
decided to finally intervene again 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
right from the upper bound of the rising channel around the 91.00 handle following
the RBI’s intervention.

The natural target for the sellers should be 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 the price bounced
around the upward trendline as dip-buyers immediately stepped in. The price is
now trading right around the key 90.40 level.

The sellers will likely step in here 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 increase the bullish bets 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 these levels to
target new lows, while the buyers will look for a break higher to position for
a rally into a new record high.

UPCOMING CATALYSTS

Tomorrow
we have the US CPI report.