- USD/INR struggles to keep bounce off weekly low, pauses three-day declines.
- Calls over RBI rate-hike eases after Governor’s downbeat economic forecasts.
- Allegations over Ukraine’s violation of ceasefire recently triggered risk-off mood, Fed-linked anxiety, Sino-American tensions also weigh on sentiment.
- Second-tier US data, Fedspeak will join risk catalysts for near-term direction.
USD/INR pares intraday gains around 75.10 during the first positive day in four ahead of Thursday’s European session.
The Indian rupee (INR) pair’s recent upside could be linked to the market’s rush to risk-safety due to Sputnik’s update conveying Ukraine’s violation of the ceasefire and the counter news from RIA afterward.
Sputnik mentioned that Ukraine fired mortar shells and grenades on Luhansk People's Republic (LPR) locations. Following that, Reuters quoted other sources to placate the bears while reporting, “Russian-backed rebels in eastern Ukraine accused Kyiv government forces on Thursday of using mortars to attack their territory, in violation of agreements aimed at ending the conflict, the RIA news agency said.”
At home, receding hopes of a hawkish performance by the Reserve Bank of India (RBI) also propels the USD/INR rebound. “Expectations of rate hike by India's central bank is pushed back after the Reserve Bank of India (RBI) Governor Shaktikanta Das lowered inflation and growth forecasts as the RBI aims to stay focused on spurring economic activity,” Reuters quotes Mint.com.
Elsewhere, Fed policymakers’ hesitance to back the 0.50% rate-hike for March gains little acceptance from the market as the recent data has been strong enough to underpin heavy rate lifts, which in turn underpin USD recovery.
While portraying the mood, US Treasury yields and stock futures remain on the back foot whereas the US Dollar Index (DXY) prints mild gains around 95.90 by the press time.
Looking forward, speculations concerning the next moves of the RBI and Fed may join geopolitical concerns to entertain USD/INR traders.
Technical analysis
A five-week-old ascending trend line joins 21-DMA and 50-DMA to highlight 74.90 as the tough nut to crack for USD/INR bears.