INR: USDINR Fortunes Hinge on Trade Deal
- The Rupee is marginally higher Friday at 88.63 and on track for a modest weekly gain.
- The rupee has suffered at the hands of the trade war and threatened sanctions by the US with hopes now turning to a trade deal. RBI Governor Malhotra overnight said that a 'good trade deal between the US and India could ease the pressure on the currency.'
- India has been in constant negotiations with the US to lower US President Trump's 50% tariffs, part of which is retribution for the ongoing purchase of Russian oil.
- Governor Malhotra went on to say "We are quite confident there will be a good trade deal going forward, and that should relieve the pressures on our current account.”
- With India set to their latest FX Reserves later, the most recent release of US$680bn points to no immediate concern as to the ability to support the currency by the RBI, but the trade deal would be the major catalyst.
- The Rupee is weaker by over 5% since the onset of the trade war in April, hitting a high on October 14 of 88.79.
- USDINR is trending along the 20-day EMA of 88.57 with any break below bringing the 50-day EMA into play at 88.33
- India has released preliminary PMIs today which have weakened to February levels. They remain higher than all regional peers and do not present a major concern currently, but will be watched as potential indicators for future slowing in the economy.
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SCHATZ TECHS: (Z5) Overbought But Uptrend Remains Intact
- RES 4: 107.400 Round number resistance
- RES 3: 107.365 High Jul 7 (cont)
- RES 2: 107.348 50.0% retracement of Apr 7 - Sep 25 bear leg (cont)
- RES 1: 107.320 High Oct 17 and the bull trigger
- PRICE: 107.190 @ 06:24 BST Oct 22
- SUP 1: 107.150/108 Low Oct 15 / 20-day EMA
- SUP 2: 106.965 Low Oct 6
- SUP 3: 107.030 Low Oct 10
- SUP 4: 106.995 Low Oct 8
A bull cycle in Schatz futures remains intact following recent gains and the latest pullback is for now, considered corrective. The contract has breached 107.190, the Oct 5 and 8 high. This signals scope for a climb towards 107.348 next, a Fibonacci retracement point on the continuation chart. Note that the contract is overbought. A deeper pullback would allow this condition to unwind. Initial key support lies at 107.108, the 20-day EMA.
EUROZONE T-BILL ISSUANCE: W/C 20 October
Greece is still due to sell bills this week, while Germany, the Netherlands, France and the ESM have already come to the market. We expect issuance to be E20.6bln in first-round operations, up from E20.4bln last week.
- This morning, Greece will look to issue E500mln of the new 26-week Apr 24, 2026 GTB.
GBPUSD TECHS: Resistance At The 50-Day EMA Remains Exposed
- RES 4: 1.3613 76.4% retracement of the Sep 17 - Oct 14 bear leg
- RES 3: 1.3544 61.8% retracement of the Sep 17 - Oct 14 bear leg
- RES 2: 1.3527 High Oct 1 and a pivot level
- RES 1: 1.3487 50.0% retracement of the Sep 17 - Oct 14 bear leg
- PRICE: 1.3385 @ 06:37 BST Oct 22
- SUP 1: 1.3317/3249 Low Oct 15 / 14 and the bear trigger
- SUP 2: 1.3220 0.764 proj of the Sep 17 - 25 - Oct 1 price swing
- SUP 3: 1.3142 Low Aug 1 and a key support
- SUP 4: 1.3041 Low Apr 14
A recent recovery in GBPUSD appears corrective - for now. However, note that price has recently pierced resistance around the 50-day EMA, currently at 1.3445. A clear break of this average would highlight a stronger reversal and expose resistance at 1.3527, the Oct 1 high and a pivot level. A break of this hurdle would be bullish. Key support and the bear trigger lies at 1.3249, the Oct 14 low. A break of it would resume the recent bear leg.
