- USD/INR portrays three-day uptrend, refreshes intraday top of late.
- Fresh concerns over US stimulus, virus woes underpin US dollar’s safe-haven demand.
- Fedspeak, risk catalysts are the key but nothing more than ECB.
USD/INR stays bid for the third consecutive day, up 0.41% intraday near 73.64 ahead of Wednesday’s European session. In doing so, the Indian rupee (INR) pair gains support from the stronger US dollar even as the greenback bulls pause the latest.
The US Dollar Index (DXY) refrains from tracking the bond coupon to the south and stays firmer around 92.55 following the biggest daily jump in three weeks.
Behind the moves could be the ongoing grim concerns over the coronavirus and its economic impacts. Recently, covid infections from Australia snapped a three-day downtrend while those from Germany rose 13,565 versus 6,726 the previous day. On the same line, Indian’s daily cases rose 37,875 versus 31,222 the previous day whereas the virus-led deaths jumped from 290 to 369.
It’s worth noting that the recently worsening COVID-19 conditions in the US push President Joe Biden towards a six-pronged strategy, the details of which will be out on Thursday and Friday. The same propelled the US 10-year Treasury yields to a two-month top on Tuesday, recently down one basis point to 1.36%.
On a different page, US policymakers jostle over the much-awaited stimulus package as the bill inches closer to the passage, with the key hurdle ahead. CNN marked hardships for the Democratic party-backed relief package and say, “House Republicans could face increased pressure to vote against a bipartisan infrastructure package when they return to Washington later this month.” On the same line, Axios mentioned, “Sen. Joe Manchin (D-W.V.) has privately warned the White House and congressional leaders that he has specific policy concerns with President Biden’s $3.5 trillion social spending dream — and he’ll support as little as $1 trillion of it — Axios’ Hans Nichols scoops.”
It’s worth observing that China’s crackdown on IT companies and mixed performance of the Asian stocks add upside pressure to the USD/INR prices.
Moving on, USD/INR traders need to closely observe the risk catalysts, mainly the virus updates and stimulus news, for fresh impulse while comments from the New York Fed President John C. Williams will be the key for the day. However, Thursday’s monetary policy decision by the European Central bank (ECB), where the tapering is teased, becomes the crucial event of the week.
USD/INR remains on the bear’s radar until staying below 74.10, comprising lows marked during late June and early August. That said, 200-DMA guards immediate upside around 73.58 while 61.8% Fibonacci retracement level of May–July upside, near 73.36, restricts short-term pullback moves.