- USD/INR refreshes intraday low, bears retake controls after two-day uptrend.
- US dollar steps back amid hopes of Fed’s Powell defending easy money, S&P retains India’s BBB- rating.
- US Treasury yields weigh on DXY, covid concerns remain elevated.
USD/INR takes offers around 74.52, down 0.16% intraday amid the initial Indian trading session on Wednesday. The Indian rupee (INR) pair refreshed the weekly high on Tuesday before recently snapping the two-day run-up on mixed clues.
India’s daily covid positivity rate remains less than 3.0% for consecutive 23 days with the latest addition of 38,792 infections. This suggests the Asian nation’s ability to keep the pandemic chained following the two waves, which in turn helps the INR.
Also on the positive side could be the global rating agency S&P’s intact rating outlook for India while citing the country's strong external settings. Additionally, the US dollar pullback from the monthly top, amid the first daily negative performance of US Treasury yields, also weighs on the USD/INR prices.
It should, however, be noted that the strong US Consumer Price Index (CPI) data, published the previous day, backs Fed tapering concerns while suggesting the safe-haven buying of the US dollar. On the same line, escalating coronavirus (COVID-19) woes in the Asia-Pacific and West add to the greenback’s risk-safe demand.
Amid these plays, US stocks futures and Treasury yields remain pressured with eyes on the covid updates for immediate directions.
However, Fed Chairman Jerome Powell’s Testimony on the Semi-Annual Monetary Policy Report before the House Financial Services Committee will be the key. Although Fed’s Powell is likely to reiterate the “transitory” outlook for price pressures, amid mixed details of CPI, any surprises won’t be taken lightly.
Read: Powell Preview: Three reasons to expect the Fed Chair to down the dollar
Technical analysis
MACD flashes the first bearish sign since June 01 but a 13-day-old support line near 74.40 could test short-term USD/INR losses. Meanwhile, bulls remain directed towards the 75.00 threshold unless breaking 74.35 support confluence including 21-DMA and a three-week-old rising trend line.
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