USDINR Technical Analysis: RBI’s intervention paused the selloff. Key levels in focus now.

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.