- USD/INR snaps two-day uptrend, extends pullback from two-month-old resistance line.
- Upbeat sentiment, off in Japan underpin US dollar’s consolidation of Fed-led gains.
- India’s virus-led death toll eases but infections stay firmer.
- Preliminary Markit PMIs for September, China’s Evergrande in focus.
USD/INR remains on the back foot around 73.75, down 0.14% on a day while stopping two-day advances heading into Thursday’s European session.
The Indian rupee (INR) pair refreshed it's monthly high the previous day after the US Federal Reserve (Fed) provided signals for the much-awaited tapering of the bond purchases. However, the following risk-on mood dragged the quote back from a descending trend line from July 19.
The headlines concerning Evergrande and doubts over the Fed rate hike could be linked to the recent optimism in the market. Also, chatters that the US policymakers make progress on the much-awaited stimulus and the US Food and Drug Administration (FDA) approved Pfizer booster shot of the covid vaccine for the aged above 65 add to the upbeat sentiment.
Additionally, an off in Japan restricts bond trading and allows markets to consolidate the US dollar’s Fed-led gains. That said, S&P 500 Futures print mild gains, up for the second day to portray the risk-on mood and weigh on the greenback’s safe-haven demand.
It’s worth noting that a reduction in India’s COVID-19 related deaths, from 383 to 282, battles the escalating virus cases, up 31,923 versus 26,974 reported the previous day.
Given the indecision of the Fed rate hike past 2022, when the tapering is likely to end, coupled with the recent stimulus hopes from the US, the US Dollar Index (DXY) pullback from monthly peak may extend, which in turn can weigh on the USD/INR prices. On the same line were expectations that China will safeguard the economy from the Evergrande blow.
Though, today’s flash readings of September month activity data from the Markit and weekly job numbers for the US will be important factors to watch.
Technical analysis
Bullish MACD signals and an ascending support line from September 03, near 73.60, keep USD/INR buyers hopeful, the stated resistance line and 50-DMA, respectively around 73.95 and 94.00 challenge the pair’s upside.
USD/INR: Daily chart
Trend: Further upside expected
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