USD/INR Price News: Indian rupee bulls retake controls below 74.00 ahead of RBI rate decision


  • USD/INR snaps two-day winning streak while refreshing intraday low.
  • Broad US dollar weakness, recently positive fundamentals from India favor bulls.
  • RBI is expected to stand pat but growth and inflation projections will be eyed closely.

USD/INR drops to 73.80, down 0.10% intraday, ahead of the Reserve Bank of India’s (RBI) interest rate decision on Friday. In doing so, the pair drops for the first time in the last three days amid hopes of no change in the RBI’s current monetary policy, as well as an upward revision to the growth and inflation projections for the current fiscal year.

While the recovery in the Q2 GDP and price measures suggest upward revision of the key economic forecasts, chatters concerning the Indian central bank’s liquidity policy also weigh on the pair. A sharp drop in the Indian Treasury Bill yields versus the benchmark 10-year Government Securities marked a steeped yield curve, which in turn suggests further liquidity measures. Though market players are divided over the same and hence the bulls are having an upper hand.

Ahead of the RBI rate decision, up for publishing at 06:15 GMT, Deutsche Bank said, “Upside surprises to recent high-frequency data and progress on the vaccine front should keep RBI on the sidelines, while slowly shifting its attention to inflation management.”

On the same line, TD Securities said, “We only expect easing once there is evidence that inflation is softening, with a cut likely in February 2021.”

Other than the RBI chatters, broad US dollar weakness and the risk-on mood pleases the USD/INR bears. The US dollar index (DXY) dropped to 90.51, the fresh low since April 2018 the previous day, currently around 90.68.

Risk barometers like S&P 500 Futures and Asia-Pacific shares remain mildly positive but the US 10-year Treasury yields dwindle amid vaccine hopes and the US-China tussle.

Looking forward, RBI becomes the key event for the pair before the US employment report for November. Although the RBI’s status-quo may fail to provide any clear direction to the USD/INR pair traders, the Indian central bank’s take on the growth and inflation figures will be the key to watch. Any upbeat analysis, which is most likely, can exert additional downside pressure on the quote.

Read: Nonfarm Payrolls Preview: Another dollar’s disappointment underway

Technical analysis

A confluence of 10-day and 50-day SMA near 73.85/90 restricts the pair’s short-term upside ahead of a falling trend line from November 13, at 74.00 now. As a result, odds of the pair’s drop to the monthly low near 73.40 can’t be ruled out.

Additional important levels

Overview
Today last price 73.8065
Today Daily Change -0.0661
Today Daily Change % -0.09%
Today daily open 73.8726
 
Trends
Daily SMA20 74.1
Daily SMA50 73.8541
Daily SMA100 74.0468
Daily SMA200 74.7427
 
Levels
Previous Daily High 73.9386
Previous Daily Low 73.6527
Previous Weekly High 74.2821
Previous Weekly Low 73.7392
Previous Monthly High 74.985
Previous Monthly Low 73.6492
Daily Fibonacci 38.2% 73.8294
Daily Fibonacci 61.8% 73.7619
Daily Pivot Point S1 73.704
Daily Pivot Point S2 73.5354
Daily Pivot Point S3 73.4181
Daily Pivot Point R1 73.9899
Daily Pivot Point R2 74.1072
Daily Pivot Point R3 74.2758

 

 

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