- USD/INR steps back from intraday top, stays on the consolidation mode.
- Options market suggests the strongest bullish bias in over a week.
- US dollar struggles amid retreating US Treasury yields, pre-Fed caution.
- India Trade Deficit, US Retail Sales will decorate calendar, FOMC becomes the key.
USD/INR reverses the early Asian gains while dropping back to 73.18 as Indian traders begin Tuesday’s work. The Indian rupee (INR) pair refreshed one-week top on Friday before stepping back from 100-day SMA afterward. In doing so, the quote reacts to the US dollar moves amid cautious sentiment ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting.
The pair recently takes clues from the US Treasury yields as they snap a two-day uptrend and weigh on the US dollar. That said, the US dollar index (DXY) refreshes intraday low to 90.47, down 0.04% on a day, by the press time. With the recently improving inflation expectations data from the regional Federal Reserve banks, the market’s mood remains downbeat before tomorrow’s key event.
It’s worth noting that the chatters surrounding further US-China tension and fears of Delta variant of the covid also weigh on the risk appetite.
On the contrary, hopes of further stimulus from the US and a notable increase in vaccine donations from the West, to the needy nations, battle the pessimism.
Amid these plays, S&P 500 Futures print mild gains while markets in Asia-Pacific, except for China, track mildly bid Wall Street benchmarks.
It should be observed that the USD/INR weakness doesn’t go hand-in-hand with the options market signals as the latest risk reversal, a ratio of bullish bets to bearish bets, jump to the highest since June 03.
Moving on, India’s Trade Deficit for May, expected to remain unchanged at $6.32 billion, may offer immediate direction to the USD/INR moves ahead of the US Retail Sales figures for May, expected -0.8% MoM versus 0.0% prior.
Above all, the market’s anxiety over the Fed’s next moves can keep the USD/INR range-bound ahead of Fed’s verdict.
Technical analysis
Failures to cross 100-day SMA, around 73.30, drags USD/INR towards an ascending support line from May 28, near 73.05. However, upbeat oscillators reject calls of any further downside below the 73.00 threshold.
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
EUR/USD consolidates weekly gains above 1.1150
EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains
GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains.
Gold extends rally to new record-high above $2,610
Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap
SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.