USD/INR Price News: Indian rupee stays pressured near 10-week low as Ukraine woes propel oil prices
- USD/INR reverse the previous day’s pullback from multi-day high, picks up bids of late.
- Indian shares track Wall Street gains but 11-year high WTI crude oil challenges bulls as India trade deficit balloons.
- Ukraine, Russia are likely up for another round of peace talks with rumors over ceasefire demand.
- Powel’s testimony 2.0, US ISM Services PMI may entertain traders but geopolitics, US NFP are more important catalysts.
USD/INR remains on the front foot around a 2.5-month high, despite the early Asian session pullback.
The Indian rupee (INR) pair refreshed multi-day high the previous day before the risk-on mood triggered a pullback. The latest run-up, however, takes clues from strong oil prices as India’s trade deficit widens.
That said, WTI crude oil prices refresh 11-year high around $113.00, around $112.00 by the press time. It’s worth noting that India’s trade deficit rose to $21.19 billion from $13.12 billion recorded in February 2021. The same propelled the April 2021-February 2022 deficit to jump to $176.07 billion.
Also negative for the INR are the chatters over the US dislike for India's neutral stand over Russia-Ukraine tussles. Rumors are in the markets that Washington may apply sanctions on India for its purchase of the S-400 Triumf missile defence system from Russia.
Elsewhere, fears of another disappointment from the peace talks between Ukraine and Russia, even as diplomats hope for a ceasefire, challenge the market sentiment and underpin the US dollar’s safe-haven demand. On the other hand, a jump in the probabilities of a 0.50% rate hike in the March Fed meeting, per CME’s FedWatch Tool, also challenges the market’s optimism.
Additionally weighing on the risk appetite are Russia’s rating downgrades from Fitch and Moody’s, as well as US President Joe Biden’s comments that he is “looking at ways” to cut Russian oil consumption by the US.
While portraying the mood, S&P 500 Futures remain sluggish and so do US 10-year Treasury yields even as Wall Street ran the show of optimism. At home, India’s BSE Sensex prints 0.50% intraday gains at the latest.
Moving on, the second version of Fed Chair Powell’s testimony will entertain traders ahead of Friday’s key US jobs report. However, major attention will be given to the Russia-Ukraine headlines and oil prices.
Technical analysis
Although sustained trading beyond the 200-DMA level of 74.43 keeps USD/INR buyers hopeful, an upward sloping trend line from early January, near 76.20, appears a tough nut to crack for the bulls.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
