- USD/INR seesaws in a choppy range around monthly bottom.
- India reports lowest virus-led deaths since March 31 but USD rebound challenges bears.
- Risk-on mood favors INR buyers, greenback sellers await fresh clues after marking the heaviest daily fall since June.
USD/INR defends 74.00, up 0.04% around 0.74.12 ahead of Tuesday’s European session. In doing so, the Indian rupee (INR) pair snaps a two-day downtrend while taking rounds to the monthly low tested the previous day.
The broad risk-on mood underpinned the USD/INR fall on Monday but a lack of major catalysts and mixed headlines concerning the virus, as well as geopolitics, probes the pair traders of late.
Among the key catalysts that portrayed a rosy start to the week was the US Food and Drug Administration’s full approval of the COVID-19 vaccine developed by Pfizer and BioNTech. Also positive for the risk appetite were the receding chatters over the Fed’s tapering as the preliminary PMI readings for August came in below previous readings and market forecasts, suggesting the need for further easy-money policies.
Recently, the UK’s calling of the emergency videoconference of the Group of Seven (G7) leaders to discuss the Taliban-related issues, as well as hints that the US Securities and Exchange Commission (SEC) will increase hardships for Beijing-based companies’ listing, favored USD’s safe-haven demand. On the same line were chatters surrounding Beijing’s crackdown on technology shares, Sino-American tussles and fears of slowing economic recovery, perceived from early indirection, of China.
Alternatively, India’s lowest COVID-19 death toll since March 31 challenges the USD/INR buyers. As per the latest Indian Health Ministry reports, the virus-led deaths came in as 354 whereas the daily cases rose by 25,467 for one day at the latest.
It should be noted that firmer US Treasury yields and mildly bid S&P 500 Futures are extra filters to challenge the USD/INR moves.
Given the lack of clarity and a light calendar, USD/INR traders may keep their eyes on the risk catalysts for fresh impulse. Among them, US President Joe Biden’s speech at 13:30 GMT over the Taliban issue, at the G7 virtual desk, will be important. Additionally, the coronavirus updates and central bank jitters will also be the key while the US New Home Sales for July, forecast 0.69M versus 0.676M, could decorate the calendar.
Technical analysis
A descending triangle formation restricts short-term USD/INR moves between 74.50 and 74.00. Adding strength to the support is the late June’s swing low, signaling that the bears need a major reason to retake controls.
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