USD/INR Price News: Indian rupee rebound eyes 77.00 on easy DXY ahead of US data

• USD/INR takes offers to refresh intraday low, extends pullback from record high.
• RBI said to have infused $700 million to defend rupee as India inflation jumped to eight-year high.
• Mixed Fedspeak, absence of unexpectedly strong PPI triggered USD pullback amid a quiet session.
• China’s covid hopes add to the recovery strength, US Michigan Consumer Sentiment Index for May eyed.

USD/INR justifies the bearish Doji at the record top while taking offers to renew the intraday low near 77.32 during the initial Indian trading session on Friday. Not only the Doji candle but cautious optimism in Asia and the US dollar’s pullback from a 20-year high also weigh on the Indian rupee (INR) pair.

After multiple days of spreading covid woes and challenging the global supply chain, China finally released some news that sighed relief to investors. That said, Shanghai’s plan of zero-COVID at the community level by mid-May, backed by comments supporting 64% vaccinated people above age 60, seems to renew optimism in China. Also keeping the expectations firmer is a three-day “at home” stay for residents for covid testing to tame and confirm the covid resurgence in Beijing.

On the other hand, the USD correction takes clues from the US Treasury yields’ bounce off a two-week low, as well as mildly bid stock futures.  The US PPI’s matching of 0.5% MoM market consensus joins Fed Chairman Jerome Powell’s reiteration of 50 bps rate hikes in the next two meetings to trigger the latest corrective moves. On the same line were comments from San Francisco Fed President Mary Daly who mentioned, “Is it 50, is it 25, is it 75? Those are things that I’ll deliberate with my colleagues, but my own starting point is we don’t want to go so quickly or so abruptly that we surprise Americans”.

Amid these plays, the US 10-year Treasury yields portray a corrective pullback after refreshing a two-week low the previous day, around 2.89% by the press time, whereas the S&P 500 Futures print rises 1.0% while licking its wound near one-year low.

It’s worth noting that the INR refreshed all-time before the Reserve Bank of India’s (RBI) intervention dragged it back from 77.66. That said, India’s Consumer Price Index (CPI) rallied to an eight-year high of 7.79% YoY versus 7.5% expected and 6.95% prior the previous day.

Looking forward, preliminary readings of US Michigan Consumer Sentiment data for May, expected 64 versus 65.2 prior, as well as headlines concerning coronavirus, geopolitics and Fedspeak will be important to gauge short-term USD/INR moves.

Technical analysis

Overbought RSI (14) line, Doji candlestick justifies the USD/INR pair’s latest pullback. However, highs marked during March and April, respectively around 77.17 and 77.07, may test the bears before directing them to the 77.00 threshold. Meanwhile, fresh buying may aim for the latest all-time high of 77.66 before challenging the 78.00 round figure.