- USD/INR keeps bounce off three-week low, mildly bid of late.
- India’s covid infections, active coronavirus cases drop to the lowest in four months.
- US dollar benefits from virus woes, pre-Fed jitters and US stimulus deadlock.
- Durable Goods Orders, US housing numbers and CB Consumer Confidence add to the watchers’ list.
USD/INR prints mild gains around 74.35, reversing the previous day’s losses, amid early Tuesday. The Indian rupee (INR) pair dropped to the three-week low on Monday before bouncing off 74.26.
The recovery moves seem to ignore India’s recently upbeat covid news. As per the official Health Ministry data, India’s active cases dropped below 400,000 for the first time since March 25. Further, the daily infections also eased to 29,689, the lowest in three months, per the news.
It should, however, be noted that the escalating US-China tussles and Beijing’s latest crackdown on IT companies, not to forget the fourth month of lower Industrial Profits from the dragon nation, weigh on the Asian currencies.
On the contrary, the US Dollar Index (DXY) benefits from the covid woes in Australia and the fears of Delta virus strain at home. Also putting a safe-haven bid under the US dollar could be the deadlock over President Joe Biden’s infrastructure spending in the Senate.
It’s worth noting that the market’s cautious mood ahead of the US Federal Reserve’s (Fed) monetary policy decision on Wednesday also exerts downside pressure on the riskier assets like INR.
Amid these plays, S&P 500 Futures fail to cheer record closing of the Wall Street benchmarks whereas the US 10-year Treasury yields stay firmer by the press time.
Looking forward, the early signal for the US Q2 GDP, namely Durable Goods Orders for June, will be important for USD/INR as the data could provide initial hints of Wednesday’s Fed decision. Also important will be US Consumer Confidence and housing data, not to ignore the risk catalysts.
Read: Durable Goods Orders Preview: Why expectations could be too high, data useful for trading GDP
Technical analysis
Despite the pair’s consolidative moves near a 74.25-20 support-zone, comprising multiple levels marked since mid-June, USD/INR traders should wait for a daily closing past 74.50-55, convergence of 10 and 21-DMA, before taking new long positions.
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