USD/INR bounces-off five-week lows, looks to 71.00 ahead of Fed
|- Rupee reverses half the Tuesday’s rally on RBI Feb rate cut calls.
- Firmer USD, ADB’s Indian GDP downgrade further lifts USD/INR.
- Fed to stand pat on interest rates, US CPI also in focus.
USD/INR jumps off five-week lows of 70.74 and now looks to regain the 71 handle, as the bulls fight back control heading into the Fed rate decision due later on Wednesday at 1900 GMT.
The Indian rupee falls for the first time in three days, largely in response to the Asian Development Bank’s (ADB) cut to India’s 2019 GDP forecast while increased calls for a Reserve Bank India (RBI) rate cut at its February 2020 meeting also collaborated to the INR pull back.
Fed in focus
The recovery in the cross is also seen on account of persisting demand for the US dollar across the board, as markets resort to repositioning ahead of the FOMC decision and Dec. 15 tariffs deadline.
Further, increased greenback purchases by a large corporate and a few other foreign banks also collaborate with the renewed uptick in the USD/INR pair. A dealer with a private bank said: “Dollar buying in the market is coming from REC, and few other foreign banks that rushed to cover their positions after the unit failed to break 70.75 on the upside”.
The immediate focus now remains on the US CPI data for near-term trading opportunities while the main event risk for the pair is likely to be the FOMC announcement.
USD/INR Technical levels to consider
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