- USD/INR keeps the previous day’s U-turn from key DMAs to refresh multi-day lows, rebounds from intraday low of late.
- Cautious mood ahead of India CPI, mixed sentiment in Asia probes Rupee buyers.
- US Dollar bears the burden of SVB-inspired risk-on mood, receding hawkish Fed bets.
USD/INR picks up bids to pare intraday losses around 81.95 during early Monday morning in Europe. In doing so, the Indian Rupee (INR) pair struggles to cheer the US Dollar’s weakness amid mixed concerns in Asia, as well as the broad US Dollar weakness. Also challenging the pair traders could be the cautious mood ahead of the key inflation numbers for India and the US.
Asia-Pacific equities trade mixed as they’re yet to overcome Friday’s bond and stock market rout, as well as bear the burden of China-linked fears.
A new term for China’s President Xi Jinping keeps the Sino-American tension on the table as he said earlier on Monday that they must resolutely oppose the interference of external forces, 'split' of Taiwan. It’s worth mentioning that Wall Street saw the red on Friday while the US bond yields also dropped the most in a month amid fears emanating from the Silicon Valley Bank (SVB) and Signature Bank fallouts. However, the US Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) took joint actions to tame the risks during the weekend. While reacting to the US regulators’ actions, US President Joe Biden said, “American people and American businesses can have confidence that their bank deposits will be there when they need them.”
Amid these plays, S&P 500 Futures bounced off a 2.5-month low, up nearly 1.60% around 3,960 by the press time, whereas the US Treasury bond yields reverse the early-day rebound from monthly low amid fresh challenges for the hawkish Fed bets.
That said, the fallout of the SVB and Signature Bank flagged fragile conditions of the US banks, which in turn pushed back hopes of more rate hikes from the US Federal Reserve (Fed). With this in mind, Goldman Sachs expects to rate hike in March while the Fed Fund Futures also cut previously upbeat odds favoring a 0.50% rate lift in the Fed rate in March.
Hence, the risk-on mood underpins the US Dollar’s weakness but the cautious mood ahead of India’s key inflation data and mixed sentiment in Asia challenges the USD/INR bears.
Looking forward, India Consumer Price Index (CPI) for February precedes Tuesday’s WPI Inflation numbers and the US CPI for the said month to direct short-term USD/INR moves. In a case where the schedule data portray inflation fears, the US Dollar may pare some of its latest losses, which in turn probes the pair bears.
Technical analysis
USD/INR bears keep the reins unless witnessing a clear upside break of a convergence of the 50-DMA and 100-DMA, around 82.10-15 at the latest.
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