- A recovery in the US Dollar Index has also provided support to USD/INR.
- Growing expectations for a smaller Fed’s interest rate hike have weakened the USD Index broadly.
- Upbeat oil prices and FII outflows might trigger volatility for the Indian Rupee.
The USD/INR pair has picked strength marginally below the critical support of 81.20 as the US Dollar Index (DXY) has attempted a recovery after refreshing a seven-month low at 101.45. The Indian Rupee asset has refreshed its day’s high at 81.35 amid firmer oil prices on a broader note.
The risk appetite of the market participants seems solid as risk-perceived assets like the S&P500 futures are holding on to their gains added in Asia after a four-day winning spell. The USD index has recovered firmly to near 101.60 but is required to clear more filters to claim a bullish reversal. Meanwhile, United States markets are closed on Monday on account of Martin Luther King Jr. Day.
A recovery in the USD Index could be short-lived as the risk profile is still extremely positive. Rising expectations for a smaller interest rate hike by the Federal Reserve (Fed) in its February monetary policy meeting are responsible for the weakness in the US Dollar Index (DXY). As per the CME FedWatch tool, chances of a 25 basis points (bps) interest rate hike by the Fed have scaled above 94%.
On the Indian Rupee front, investors are likely to shift their focus toward the Fiscal Budget FY2023-24, which is scheduled for the first week of February. In the meantime, rising Foreign Institutional Investment (FII) outflows are also impacting the Indian Rupee bulls.
Being one of the major importers of oil, rising oil prices are also expected to impact the Indian Rupee bulls. Strategists at TD Securities expect the global benchmark crude to trade at $100/b in the latter part of 2023 led by China’s reopening and the Fed’s lower rate hike structure, which might keep affecting the Indian Rupee.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD keeps the bullish outlook above 0.6600
A negative session in the Greenback allowed AUD/USD to leave behind two consecutive sessions of losses and reclaim the area beyond the key barrier at 0.6600 the figure on Thursday.
EUR/USD: Next target emerges at 1.0800
In line with the broad improvement in the risk appetite, EUR/USD reversed part of the recent weakness and advanced to the vicinity of the 1.0800 region in response to the renewed selling pressure hurting the Dollar.
Gold poised to resume its advance
XAU/USD now gathers fresh steam and advances to the highest level in many sessions north of the $2,330 mark per troy ounce on the back of further selling pressure hurting the Greenback as well as mixed US yields.
Bitcoin price is down over 20% from its peak, but BTC macro uptrend remains very much intact
Bitcoin (BTC) price peaked at $73,777 in March, marking a new all-time high recorded over a month before the fourth halving. The bold move north has however been followed by a cascade of load-shedding exercises, though not enough to invalidate the big-picture bullish outlook for BTC.
Bank of England update: A mixed bag
As widely expected, the Bank of England (BoE) held the Bank Rate on hold at 5.25% for a sixth consecutive meeting, its highest level since 2008. However, what was key today was the central bank signalled it could be getting closer to easing policy in the summer, possibly as early as June’s meeting or in August, which is fully priced in at the moment.