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USD/INR Price News: Indian rupee drops to 12-week low amid risk-off mood

  • USD/INR stays mildly bid near the highest levels since April.
  • Stocks in Asia-Pacific stay pressured around one-week low, Treasury yields pare early losses.
  • Covid woes, indecision over Fed’s next moves propel bullish bets on DXY to over a year’s high.
  • Qualitative catalysts remain crucial for near-term trade direction.

USD/INR prints mild gains around 74.75, up 0.16% intraday, while rising for the third consecutive day to refresh multi-day top amid Monday’s Asian session. Alike other currency pairs on the board, the Indian rupee (INR) pair also justifies the US dollar’s safe-haven demand amid the coronavirus (COVID-19) woes.

Although the latest covid data from India have been less worrisome compared to other Asia-Pacific friends, fears that the virus variant will reverse the economic recovery from the pandemic keep the USD/INR prices high.

That said, the Indian Health Ministry data, per Reuters, suggest that India reports a 38,164 daily rise in covid infections, taking a total to 31.14 million and 499 daily rise in the virus-led fatalities. On the other hand, the UK reports over 50,000 cases but still braces for “Freedom Day”. Elsewhere, Australia prepares for extending local lockdowns beyond this Tuesday’s deadline in Sydney.

These plays add to the US Dollar Index (DXY) strength, due to its risk-safety allure. Also favoring the DXY bulls could be the indecision over the Fed’s next moves as policymakers reject the need for tapering and rate hike but the data suggests otherwise. As a result, the Financial Times (FT) came out with the news saying, “Bets that greenback index will rise have jumped to the highest level in more than a year.”

It’s worth noting that the recently refreshing US-China tussles also put a bid under the US dollar. Earlier in the day, Bloomberg recently said, “US Congress is aiming to hobble China’s ability to recruit scientists and academics in the US as part of broader moves in Washington to confront the Asian nation’s growing clout.” Following that, Treasury Secretary Janet Yellen said, per New York Times (NYT), that the China trade deal has hurt American consumers.

Given the risk-off mood helping the US dollar amid a light calendar, USD/INR prices are likely to remain bid but the bulls may remain cautious near multi-day top.

Technical analysis

A daily closing beyond the monthly resistance line, around 74.90, will direct USD/INR bulls to the yearly top surrounding 75.65, failing to do so can trigger a pullback move towards two-week-old support line near 74.50. Overall, bullish momentum remains intact until the quote stays beyond 73.70-65 support confluence including 50-day and 100-day SMAs.

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