- USD/INR extends the previous day’s pullback from three-week high.
- US Treasury bond yields weigh on greenback amid receding fears of financial crisis.
- Mixed sentiment, light calendar and pre-Fed anxiety are extra catalysts that allow Indian Rupee to lick its wounds.
USD/INR holds lower grounds near 82.50 while keeping the previous day’s U-turn from a three-week low during early Friday. Even so, the Indian Rupee (INR) pair remains firmer for the second consecutive week heading into the next Wednesday’s Federal Open Market Committee (FOMC) monetary policy meeting.
The pair’s latest losses could be linked to the market’s cautious optimism as global policymakers and bankers try hard to avoid the return of 2008’s financial crisis. Additionally weighing on the USD/INR price could be the statements from the global rating giant Fitch that ruled out fears of US and European banking fallouts on the Asia-Pacific (APAC) banks.
Elsewhere, mixed US data raised doubts about the Federal Reserve’s (Fed) future rate hikes, even if the 25 basis points (bps) of an interest rate increase is almost given, which in turn allows the USD/INR to pare recent gains. Furthermore, the easing in Oil prices, despite the latest rebound, also favors the INR due to India’s reliance on energy imports and heavy current account deficit.
Alternatively, the recent downside inflation clues from India and the equity market rout challenge the pair sellers amid broad-based US Dollar buying. Additionally, traders appear less convinced by the latest efforts to defend the global banking sector as the measures appear restrictive. Also, the key central banks turned down the expectations of easy rate hikes and have allegedly blocked information on the causes behind the latest baking rout, which in turn keeps USD/INR bulls hopeful.
Amid these plays, the S&P 500 Futures pick up bids to pare the intraday losses around 3,995, following an upbeat close of the Wall Street benchmarks, whereas the US Treasury bond yields fade the previous day’s corrective bounce off the monthly low.
Looking forward, preliminary readings of the US Michigan Consumer Sentiment Index for March and the UoM 5-year Consumer Inflation Expectations for the said month will also be important for clear directions ahead of the next week’s Fed meeting.
Technical analysis
A failure to cross the five-week-old descending resistance line, around 82.85 by the press time, directs USD/INR bears toward a convergence of the 100 and 50 DMAs, near 82.10.
