USD/INR pulls back from 2-month high, eyes on India/US CPI, Fed’s Powell

With the key catalysts being in the pipeline, USD/INR steps back from mid-September high while taking rounds to 71.67 ahead of the European session on Wednesday.

The USD/INR pair initially surged to 72.00 amid upbeat sentiment surrounding the trade deal between the United States (US) and China after the US President Donald Trump said to be “too close” to the deal despite staying ready to increase tariffs on failed talks.

However, protests in Hong Kong and hawkish comments from the US Federal Reserve (Fed) policymakers seem to be the reasons behind the pair’s recent declines.

The risk tone, as portrayed by the US 10-year treasury yields, stays mostly positive around 1.92% while Indian stocks and S&P 500 Futures remain under pressure.

The US and India both are scheduled for publishing headline Consumer Price Index (CPI) data for October at 12:00 GMT while the Fed’s Chairman Jerome Powell’s testimony in front of the Joint Economic Committee will be the key to watch afterward. While YoY details of the US CPI and CPI ex-Food & Energy are likely to remain unchanged at 2.4% and 1.7% respectively, the market anticipates an improvement in Indian CPI from 3.99% prior.

Technical Analysis

While sustained trading beyond 72.00 can trigger pair’s run-up towards 72.40 and the yearly top close to 72.65, sellers await the downside break of 71.30 to aim for 71.00 and 70.36/35 support-zone including lows marked on August 08 and September 27.