USD/INR Price News: Indian rupee renews 15-week low on USD weakness ahead of US Inflation

• USD/INR stays pressured around multi-day bottom after five-day downtrend.
• India’s active covid cases jump to seven-month high, rising the most since late April.
• Washington announced public health emergency, Fed’s Powell drowned USD with concerns over balance sheet normalization.
• World Bank defends 2022 India GDP, revised up 2023 growth forecasts.

USD/INR remains depressed around the lowest level since September 27 during the early Indian trading session on Wednesday. That said, the quote dribbles around 73.75 by the press time, after renewing the multi-day low to 73.72.

The Indian rupee (INR) pair refreshed multi-day low early in Asia amid broad risk-on mood, as well as the US dollar weakness. However, cautious sentiment ahead of the all-important US Consumer Price Index (CPI) joins virus woes and mixed forecasts from the World Bank (WB) to test the pair bears.

The US Dollar Index (DXY) recently refreshed two-month low around 95.55, following the 0.35% daily fall the previous day.

India reports the biggest daily jump in active covid cases since April 23 to, unfortunately, poke the highest coronavirus case levels since June 14, at 955,319 the latest per the official figures. It’s worth observing that the daily infections eased with 407 fresh cases versus 428 noted the previous day.

Elsewhere, the WB cited coronavirus woes to cut the global GDP expectations for 2022 to 4.1% from 4.3% previous estimations. However, the Washington-based institute revised up Indian GDP forecast for the Financial Year (FY) 2023 to 8.7% versus 7.5% previous expectations while keeping the FY 2021-22 unchanged at 8.3%, same as expected in October.

It’s worth noting that Fed Chair Jerome Powell’s readiness to rate hike, per Testimony in front of the Senate Banking Committee, could please the USD bulls. The reason could be linked to the comments stating that the balance sheet runoff could happen "perhaps later in the year," as well as his expectations that the supply crunch will ease somewhat and the economic impact of the Omicron variant will be short-lived.

That said, the US Treasury yields remain sluggish after recent declines but the equities fail to extend Wall Street gains by the press time, which in turn probe USD/INR bears ahead of the key US data.

Moving on, Fed hawks will gain additional support from today’s US CPI if the figures match the 7.0% YoY forecast versus 6.8% prior. It should be observed that the US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, jumped the most in two months the previous day.

Read: US Inflation Preview: Dizzying heights of 7% would cement a March hike, supercharge the dollar

Technical analysis

A clear downside break of the 61.8% Fibonacci retracement of March-December 2021 downside, around 73.85, directs USD/INR towards an upward sloping trend line from May, near 73.68, a break of which will direct bears to mid-September 2021 low near 73.35.

Even if the quote rises past 73.85, the 200-SMA level of 74.30 acts as a tough nut to crack before recalling the USD/INR buyers.