USD/INR holds below 71.00, but still positive for the day
- Indian rupee drops versus the US dollar after rising during four consecutive days.
- USD posts mix results across the board, US CPI data mostly ignored.
The USD/INR rebounded today after hitting five-week lows at 70.71. The recovery found resistance under 71.00 and as of writing trades around 70.85, far from the top, but still about to post the first daily gain in five days.
The US Dollar Index is trading near 97.50, around the same level it closed yesterday. It failed to hold to gains and pulled back after testing weekly highs. Data from the US showed the annual CPI reached the highest level since October at 2.3% after rising 0.2% in December (below the 0.3% expected).
In India, inflation numbers released on Monday showed the CPI climbed to the upper limit of the Reserve Bank of India’s (RBI) target band of 2-6%, for the first time since July 2016. Today, it was reported the Indian Whole Price Index (WPI) rose to 2.59% in December. India’s retail price index jumped to 65-month highs.
Analysts at ANZ expect price pressures to remain elevated in India in January, after which base effects will turn more supportive. According to them, inflation data “clearly puts an impending rate cut off the table, but they still see possible a cut in June, “once inflationary pressures subside.”
Upside momentum eases on CHN limited retreat
The USD/INR failed to break above 71.00 on the back of limited USD strength. Then, the pair pulled back trimming gains as the Chinese yuan also moved off daily lows versus the greenback. On Wednesday, the US and China are expected to sign the “phase one” deal. The event should not have a significant impact on prices, but if details of the agreement reveal, it could be a market mover.
USD/INR Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
