- USD/INR defends the previous day’s rebound from a fortnight low.
- Indian government cites multiple reasons to justify rupee’s fall.
- Pre-Fed anxiety joins global recession risk, downbeat signals from Wall Street to favor pair buyers.
- FOMC all set for a 0.75% rate hike but Powell’s speech will be crucial.
USD/INR picks up bids to 79.86 as buyers defend the previous day’s rebound during Wednesday’s Asian session. In doing so, the Indian rupee (INR) pair ignores the recent pullback of the US dollar amid fears of economic slowdown, as well cautious mood ahead of the Federal Open Market Committee (FOMC) meeting.
Earlier in the day, India’s Minister of State Finance Pankaj Chaudhary conveyed various reasons ranging from the covid to the Fed’s rate hike while trying to justify the recent fall in the INR to the various political representatives in the Rajya Sabha.
Even so, fears of impending global economic slowdown, mainly due to the energy crisis in Europe and the Fed’s aggression, appear to keep the USD/INR bulls hopeful. It’s worth noting that downbeat earnings from the Wall Street stars, like Walmart, Alphabet and Microsoft, also justify the market’s risk-aversion wave, which in turn weighs on the Indian currency. That said, the International Monetary Fund (IMF) and the global rating giant Moody’s raised concerns over the recession on Tuesday.
Alternatively, softer WTI crude oil prices, down 0.50% intraday near $94.50 by the press time, should have favored the USD/INR to pare the latest gains but could not. On the same line is the market’s cautious optimism concerning the US-China ties on US President’s readiness for a virtual meeting with his Chinese counterpart Xi Jinping.
Amid these plays, S&P 500 Futures print 0.80% intraday gains as it rebounds from the weekly low. Additionally, the US 10-year Treasury yields also add 1.8 basis points (bps) to 2.80% as traders brace for the Fed’s showdown.
Moving on, the US Durable Goods Orders for June, expected -0.4% forecast compared to 0.8% prior, could try to entertain traders, together with the chatters surrounding the US-China talks. However, major attention will be given to the Fed’s verdict and Chairman Jerome Powell’s press conference. It should be noted that the US central bank is expected to announce 75 basis points (bps) of a rate hike but some of the traders also highlight the case for the 100 bps move, making the event more interesting amid recession fears.
Technical analysis
10-day EMA restricts immediate USD/INR pullback around 79.75 but bulls seek successful trading above 80.00. That said, RSI hints at the buyer’s dominance but the MACD signals tease sellers, suggesting a notable pullback if the quote breaks 79.75 support.
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