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Dollar Bid well Ahead of Jackson Hole

* Corporate dollar outflows, risk-averse sentiments and weaker regional currencies weighed on the rupee. Spot USDINR, after briefly consolidating in the range of 79.70 to 79.10 in the past weeks, closed at 79.78. The range breakout affirms the continuation of an uptrend with the higher side eying 80.10 and 80.70 while on the downside 79.10 willturn the support.

* A gauge of the greenback soared to the highest in a month after Federal Reserve officials reiterated their commitment to interest-rate hikes. Geopolitical tension and weakness in the Chinese yuan also propelled the dollar, which strengthened against all of its Group-of-10 peers. Markets are front-running a hawkish outcome with the ICEDollar index gaining 2.4% to 108.2 in the week gone.

* with the ICEDollar index gaining 2.4% to 108.2 in the week gone. ? Monetary tightening and increasingly adverse geopolitical riptides are key factors supporting the dollar, but the more overvalued it becomes, the harsher the unwinding is likely to be. So far, the dollar is navigating increasingly rough seas but is keeping its head well above water.

* CFTC Positions: In FX, specs were sellers of euros (8.2k), yen (3.9k), and Aussie (1.7k), but buyers of everything else. The most notable flows were in CAD (5.6k) and CHF (4.7k). The aggregate dollar long fell slightly (by $300 million) on the week.

* The market remains divided as to whether the Federal Reserve will hike rates by 50bp or 75bp on 21 September, but things may become clearer after the annual Jackson Hole policy symposium begins this Thursday. Last week, Fed officialsseem to be preparing investors for a hawkish speech from Chairman Powell at Jackson Hole

USDINR

Technical Observations:

* USDINR August futures closed above the last fifteen-day range, confirming an upward breakout.

*  The short-term moving averages are placed above the medium-term moving averages, indicating an uptrend’s continuation.

*  Momentum oscillators, Relative Strength Index of 14 days pierced above 50 and heading north indicating positive momentum.

* DMI has been flattening near the breakeven line indicating consolidation.

* Short covering has been seen in the week gone following a rise in price and the fall in open interest and volumes.

* The bias remains bullish as long as USDINR August futures hold the level of 79.10 while on the higher side one should look for 80.38, the recent swing and life high.

EURINR

Technical Observations:

* EURINR August futures broke the previous swing low of 80.45 validating the bearish trend.

* The pair took resistance at 55 days exponential moving average and closed well below13 days exponential moving average.

* Momentum oscillator, Relative Strength Index of 14 days period given negative cross over and heading south suggesting bearish     momentum.

* MACD has been placed below zero line and given negative crossover to average shows bearish trend.

* Short buildup has been seen as price decline while aggregate open interest rose in the past week.

* EURINR August futures may continue their bearish trend and fall below 80.19 open for 79.70 odd levels while on the upside 81.50    to 82.16 remainsthe supply area.

GBPINR

Technical Observations:

 * GBPINR August futures broke the support of 96, briefly trading in the range of 96 to 97.55 for more than a month, showcasing the strength of bears.

* If we look at the bigger time horizon, the pair is still in the broad range of 94.40 to 97.60. The decisive trend breakdown can be seen only below 94.40 with a downside target of 91.20.

* Directional Movement index turned bearish with +DI placed below –DI and ADX line started rising indicating a bearish trend.

* Momentum oscillator, RSI has been heading south showing bearish momentum.

* GBPINR August futures could show a sharp sell-off once the level of 94.40 breaks as two months range breakdown confirms while on the higher side 96 and 96.70 act as resistance.

JPYINR

Technical Observations:

 * JPYINR August futures formed bearish Engulfing candles after Doji candlestick pattern validates bearish trend.

* The pair has formed a bearish sequence of lower top bottoms on an hourly and daily chart indicating the downtrend.

* Momentum oscillator, Relative strength index of 14 days below the centre line and heading towards oversold zone indicating weak momentum.

* Directional movement index is indicating negativity with +DI placed below –DI and ADX line hovering around 15.

* MACD has given negative crossover and is about to fall below the zero line making the case for a downtrend.

* JPYINR August futures’ trend remain bearish and may find support around 57.75 and resistance at 59.48, in the short-term.

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