- USD/INR remains pressured for the fourth consecutive day as it renews intraday low.
- LIC IPO hints at heavy inflow of funds in Indian markets.
- Hopes that Fed won’t offer any surprises also underpin rupee strength.
USD/INR holds onto the latest southward grind, down 0.05% intraday while refreshing daily lows to 76.40 by the press time.
Market’s expectations from no additional hawkish measures from the Fed, apart from what is already anticipated and priced in, seem to have recently probed the US dollar bulls around a 20-year high. On the same line is the lack of an action at the bond markets in Asia due to holidays in China and Japan.
At home, the start of India’s largest insurance company’s public offer, namely the Life Insurance Corporation (LIC) of India, hints at the heavy inflow of funds to the equity markets. Also supporting the INR is the recent weakness of oil prices, a major burden on the Indian finances due to the reliance on energy imports.
On the flip side, a light calendar in Asia and global inflation fears, coupled with the geopolitical crisis in Ukraine and covid woes from China, challenge the USD/INR bears of late.
That said, the US Treasury yields eased from the highest since late 2018 by the end of Tuesday, unchanged at around 2.97% of late, whereas the US stock futures and Indian equities print mild gains as we write.
Given the dicey markets ahead of a major event, the USD/INR downside seems limited before the Fed’s move. Though, US ISM Services PMI and ADP Employment Change for April may entertain intraday traders.
Technical analysis
A clear downside break of the monthly support line, now resistance around 76.70, directs USD/INR bears toward the 21-DMA level surrounding 76.30.
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