- USD/INR prints three-day uptrend, recently on the bids.
- Indian exports jump 12.4% for April-May 2021 but factory activity growth slowed significantly.
- RBI may keep the benchmark rates unchanged, infuse liquidity on Friday.
- US dollar rebound adds to the bullish momentum.
USD/INR jumps to a fortnight top during the three-day rise on early Wednesday. The Indian rupee (INR) pair recently took bids after the nation’s PMI data suggests the economy fades recovery moves initially expected in early 2021.
Indian PMI fell to 50.8 in May from 55.5 in April, the lowest since July 2020, per Reuters, during Tuesday. Also negative for the INR could be the cautious comments from the global rating agencies and banks signaling weakness in the year 2021 GDP.
The news adds to speculations that the Reserve Bank of India (RBI) will take measures to infuse liquidity in the markets while keeping the benchmark rates unchanged. “All 51 economists polled by Reuters expected the MPC to hold rates as Asia's third-largest economy grapples with various state lockdowns,” said Reuters. The survey also adds, “The monetary authority is expected to reiterate its commitment to liquidity.”
Additionally, the options market is also bearish on the USD/INR as the risk reversal rose for two consecutive days after last Friday.
Meanwhile, a 12.4% jump in Indian merchandise exports during the April-May period as well as the US dollar’s hesitant recovery test the USD/INR bulls.
Moving on, the pair may keep the latest run-up amid a lack of fresh catalysts ahead of the key Friday when the US employment data and the RBI will propel USD/INR moves.
Technical analysis
Not only the immediate upside hurdle of 21-day SMA around 73.14 but 73.20-25 and 200-day SMA near 73.50 also test USD/INR buyers. Hence, expectations of witnessing a pullback can’t be ruled out.