- USDINR licks its wound at the lowest levels in a month, snaps three-day downtrend.
- Firmer yields, covid woes from China test bears even as Fed concerns weigh on prices.
- Softer oil price adds strength to the bearish bias amid an off in Indian markets.
USDINR picks up bids to regain 82.00 while paring recent losses at the monthly low during Tuesday’s Asian session. In doing so, the Indian Rupee (INR) pair prints the first daily gains in four by printing 81.92 the figure at the latest.
The biggest jump in China’s covid cases since April and the market’s anxiety ahead of the US midterm elections seem to underpin the USDINR pair’s recent rebound. Also keeping the quote firmer could be the holiday in India due to Guru Nanak Jayanti.
It should be noted that the recently downbeat prices of WTI crude oil, down 0.35% to $91.55 by the press time, also weigh on the USDINR prices due to India’s reliance on energy imports and record current account deficit.
However, the looming concerns over the US Federal Reserve’s (Fed) pivot, as well as the recently mixed comments from the Fed officials, keep the US dollar bears hopeful. It’s worth noting that the Fedspeak has recently shifted towards the concerns of pivot than the further rate hikes, which in turn suggests easy interest rate lifts and weigh on the greenback.
Elsewhere, a light calendar and the market’s wait for Thursday’s US Consumer Price Index (CPI) for October, as well as recently firmer US inflation expectations, challenge the USDINR bears. That said, the US inflation precursors, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, print one-week highs of 2.53% and 2.61% according to the latest readings.
Amid these plays, the US Treasury yields are firmer and stock futures remain indecisive but the US Dollar Index (DXY) rebounds from a one-week low.
Looking forward, a light calendar and off in India could test USDINR traders and may keep the latest corrective bounce on the table.
Technical analysis
The USDINR pair’s first daily closing below the 21-day EMA, close to 82.25, in nearly two months keeps bears hopeful of testing the 50-day EMA support level surrounding 81.55.
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