FUNDAMENTALOVERVIEWUSD:The US dollar rallied strongly across the board on Friday as the very hot NFP gain with higher revisions for the priormonths served as a wake-up call that the Fed could be forced to raise interestrates. The job gains have been much higher than the estimated breakeven ratelately. The unemployment rate fell to an unrounded 4.29% vs 4.33% in the priormonth. Following the NFP report, the market fully priced in a rate hike byyear-end with the total tightening standing at 26 bps right now. We can nowexpect the Fed to drop the easing bias at the upcoming meeting, but the focuswill be mostly on the dot plot and forward guidance. Even though a rate hike isnow fully priced in, if the Fed endorses the market pricing, it willeffectively confirm that the bias has now shifted to tightening and mighttrigger another rally in the greenback.This week, the most important event is the US CPI report due tomorrow(barring a surprising breakthrough in US-Iran negotiations). The question formarkets is now when and how many rate hikes the Fed might deliver by year-end.Upside surprises would be seen as more hawkish and will likely give the US dollara boost. Conversely, lower than expected figures should alleviate some of the mosthawkish fears and might trigger a pullback in the short-term. INR:On the INR side, theRupee got a slight boost from the RBI decision as traders interpreted it asmore hawkish with RBI Governor Malhotra warning that if inflation were tobecome generalised, the bank would need to raise interest rates. The gains wereshort-lived though as the very strong US NFP number boosted the US dollaracross the board. The escalation between Israel and Iran has also weighed onthe Rupee as oil prices jumped, but the quick de-escalation helped avoiding abreakdown. In the short-term,the Rupee has been closely correlated with oil prices, so positive developmentson the US-Iran front should keep giving the INR a boost. Conversely, extendedstalemate or further escalations will likely keep weighing on the currency andpush it into new record lows. The hawkish Fedrisk is now also a major driver. Therefore, strong US data or more hawkish thanexpected FOMC are going to put further pressure on the Rupee as the US dollarwill likely extend gains. In the bigpicture, the Indian Rupee remains on a bearish structural trend against the US dollar,so the dip-buyers will likely look for opportunities around strong technicallevels to keep pushing the USD/INR pair into new highs. USDINR TECHNICALANALYSIS – DAILY TIMEFRAMEOn the dailychart, we can see that USDINR is consolidating just below the key 96.00 resistance. The sellerswill likely continue to step in around the resistance with a defined risk aboveit to keep targeting new lows. The buyers, on the other hand, will want to seethe price breaking higher to pile in for a rally into new record highs. USDINR TECHNICALANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hourchart, we can see more clearly the rangebound price action. We got a selloff onFriday on a slightly more hawkish RBI decision but the losses were eventuallyerased following the very strong NFP number and the Israel-Iran escalation. From a riskmanagement perspective, the buyers will have a better risk to reward setuparound the major trendline, but we are unlikely to see such a pullback withoutan RBI intervention, a soft US CPI or a surprising breakthrough in US-Iranstalemate.USDINR TECHNICALANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hourchart, there’s not much we can add here as the sellers will continue to step inaround the resistance to keep pushing into the major trendline, while thebuyers will look for a break to pile in for a rally into new record highs.UPCOMING CATALYSTSTomorrow, we have the USCPI report. On Thursday, we get thelatest US Jobless Claims figures and the US PPI report. On Friday, we concludethe week with the Indian CPI report and the University of Michigan consumersentiment survey. This article was written by Giuseppe Dellamotta at investinglive.com.