Basic overview
USD:
The US dollar regained some strength to start the week as a long stalemate between the US and Iran brought oil prices back to triple-digit levels.
That seems unlikely to change anytime soon, as Trump has rejected Iran’s proposal to open the Strait of Hormuz first and then hold nuclear talks. Unfortunately, with US stock prices at all-time highs, Trump may not feel any pressure to concede.
This may pave the way for the next US dollar rally if the Strait of Hormuz remains closed for a longer period and oil prices remain high, forcing the Federal Reserve to raise interest rates in the coming months.
Today, we have the FOMC policy decision, and although the Fed is expected to keep everything unchanged amid the US-Iran uncertainty, there is a risk of a more hawkish bias due to resilient US data and a longer than expected US-Iran war. A neutral Fed shouldn’t lead to much volatility, but a more hawkish Fed could give the US dollar a boost.
Indian Rupee:
On the Indian rupee side, the stalemate between the US and Iran led to another sell-off as the Indian rupee erased all the gains it had made since the beginning of the month and is now approaching its record lows. The currency is likely to remain under pressure as long as the situation in the Strait of Hormuz remains unresolved.
In the big picture, the Indian Rupee remains in a downward structural trend against the US Dollar, so dip buyers will likely look for opportunities around strong technical levels to continue the push towards new highs.
Technical Analysis of USDINR – Daily Time Frame
USD – daily
On the daily chart, we can see that US dollars Extended yesterday’s gains on broad US dollar strength. The natural target for buyers is the all-time high around 96.00. If the price gets there, we can expect sellers to step in with specific risks above the level in preparation for a drop back to the 94.00 level. On the other hand, buyers will look for a break to increase bullish bets to new highs.
Technical Analysis of US Dollar – 4-hour time frame
USD – 4 hours
On the 4-hour chart, we have an uptrend line outlining the current bullish momentum. We can expect buyers to continue to rely on the trend line with a definite risk below it to continue pushing towards new highs. On the other hand, sellers will look for a breakout of the accumulation and target a decline back to the 94.00 support level.
Technical Analysis of US Dollar – 1 hour time frame
USD – 1 hour
On the hourly chart, there is not much we can add here as buyers will likely continue to rely on the trend line to continue pushing towards new highs, while sellers will wait for a breakout to open the door to new lows.
Upcoming stimuli
today We have a FOMC policy decision. Tomorrow we’ll get Q1 US GDP, the US Employment Costs Index and the latest US unemployment claims numbers. On Friday, we conclude the week with the release of the US ISM Manufacturing PMI.
