• USD/INR retreats from intraday high but stays firmer around all-time high marked on Monday.
  • India inflation is expected to jump to 18-month high amid firmer fuel, food prices.
  • US inflation failed to propel yields, market sentiment dwindles on mixed clues.
  • RBI’s surprise rate hike already signalled higher price pressure, softer number can help INR pare recent losses.

USD/INR portrays the typical pre-data anxiety by retreating from the intraday top to 77.45 amid the mid-Asian session on Thursday. In doing so, the Indian rupee (INR) pair remains on the back foot around the record top, marked on Monday, with eyes on India's inflation data for April, amid expectations of witnessing 18-month high figures.

Although the market forecasts a 7.5% YoY print of India Consumer Price Index (CPI) for April, versus 6.95% prior, traders appear cautious as the Reserve Bank of India (RBI) has already announced 40 basis points (bps) of a rate hike to surprise the market earlier in the month. As result, traders would seek anything above the expectations to mark a notable move.

On Wednesday, much-awaited US Inflation data rose past market consensus but the traders sought solace in softer-than-previous releases. That said, the headline Consumer Price Index (CPI) rose to 8.3% YoY versus 8.1% expected and 8.5% prior. More importantly, the CPI ex Food & Energy, better known as Core CPI, crossed 6.0% forecasts with 6.2% annual figures, versus 6.5% previous readouts.

With this in mind, Reuters said, “Downward pressure on the INR will increase due to a broadly stronger U.S. dollar, higher oil prices and the threat to India's nascent economic recovery from higher interest rates. With the RBI apparently keen to control excessive INR depreciation, choppy trading is likely.”

It’s worth noting that foreign fund outflow and the broad US dollar strength, amid Fed’s 50 bps rate hike keep USD/INR buyers hopeful. “Foreigners have sold a net $19 billion of domestic shares year-to-date and a net $579.10 million of debt in May as investors exit Indian and other emerging markets,” per Reuters.

Also weighing on the USD/INR prices is the latest indecision among the traders, even as stock futures print mild gains and the yields are down. That said, China’s readiness to form policies to better counter the covid woes also underpins the latest cautious optimism and so should recently mix Fedspeak.

Moving on, India inflation will be crucial for USD/INR traders while weekly prints of the US Jobless Claims and monthly Producer Price Index (PPI) will also decorate today’s calendar.

Technical analysis

Bearish RSI divergence and repeated failures to cross a five-month-old ascending resistance line, near 77.55 by the press time, keep USD/INR sellers hopeful of a pullback towards March’s high near 77.17.

Additional important levels

Today last price 77.4615
Today Daily Change 0.0388
Today Daily Change % 0.05%
Today daily open 77.4227
Daily SMA20 76.5892
Daily SMA50 76.3197
Daily SMA100 75.5343
Daily SMA200 75.0194
Previous Daily High 77.481
Previous Daily Low 77.1552
Previous Weekly High 77.0548
Previous Weekly Low 75.9846
Previous Monthly High 77.0715
Previous Monthly Low 75.2634
Daily Fibonacci 38.2% 77.3566
Daily Fibonacci 61.8% 77.2797
Daily Pivot Point S1 77.225
Daily Pivot Point S2 77.0272
Daily Pivot Point S3 76.8992
Daily Pivot Point R1 77.5507
Daily Pivot Point R2 77.6787
Daily Pivot Point R3 77.8765



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