USD/INR Price News: Indian rupee buyers seek entries above 74.00 on cautious optimism

• USD/INR steps back from intraday top after two-day downtrend.
• Mildly upbeat sentiment weighs on USD ahead of Powell’s testimony.
• US-China jitters, covid updates and second-tier data add filters to the moves.

USD/INR defends the 74.00 threshold, snapping a two-day pullback from late-April top amid the initial Indian trading session on Tuesday. That said, the Indian rupee (INR) pair is up 0.07% intraday around 74.17 by the press time.

Although risk barometers are mildly positive and exert downside pressure on the US dollar, indirectly favoring the USD/INR bulls, uncertainty over the Fed’s outlook probe the pair buyers after declining for two consecutive days.

The Fed policymakers’ ability to convince markets of no immediate risk to the current rates and bond purchases seem to have dragged the greenback recently. Though, mixed comments from the US bankers keep traders on the edge.

Early in Asia, remarks of the Fed Chairman Jerome Powell crossed wires, via Reuters, suggesting inflation risk as transitory whereas comments from New York Fed President John C. Williams take multiple turns in his latest speech that recently mentioned that Fed is talking about talking tapering. Dallas Fed President Robert Kaplan was on the same line while favoring “taking the foot off the accelerator sooner rather than later.”

The Sino-American story also regains the market’s attention as Beijing’s ability to deliver trade deal promises risks fresh tensions even as Global Times terms the conditions as “make-or-break”. Elsewhere, improvement in the coronavirus (COVID-19) conditions in India and the US add to the market’s optimism and keep USD/INR pair sellers hopeful. 

Amid these plays, US stock futures and Treasury yields remain mildly bid whereas the US dollar index (DXY) struggles to keep early Asian recovery moves. Further, India’s BSE Sensex prints 0.80% intraday gains to refresh record top as government fastens the jabbing.

Looking forward, US Existing Home Sales and Richmond Fed Manufacturing Index may entertain USD/INR traders, mostly teasing the bears, ahead of Fed Chairman Powell’s testimony. Although Powell is up for taming the tapering and rate hike woes, any negative surprises, should justify the USD/INR pair’s defensive performance above the 74.00 round figure and can aim to refresh the monthly high.

Technical analysis

Pullbacks from the mid-April tops join receding bullish bias of the MACD histogram to direct USD/INR towards 50-day SMA retest, around 73.65.