Analysis Of Situation Of The USD/INR Pair

• USD/INR extends the previous day’s pullback from one-week high, pressured around intraday low of late.
• US Dollar bulls take a breather at three-month high as traders await the key employment data amid mixed feelings.
• Cautious optimism in Asia adds strength to the Indian Rupee’s rebound.
• Second-tier data, risk catalysts eyed for intraday directions.

USD/INR clings to mild losses around 81.85-90 during early Thursday in Europe, extending the previous day’s pullback from a one-week high.

In doing so, the Indian Rupee (INR) pair cheers the US Dollar’s positioning for Friday’s jobs report amid sluggish early hours of trading. Adding strength to the USD retreat could be the inaction in the bond market as major yields remain sidelined after posting. With this, US Dollar Index (DXY) prints the first daily loss in three while keeping the early Asian session pullback from the highest levels since December 01, 2022.

It should be noted, however, that the cautious optimism in Asia, mainly due to the sluggish S&P 500 Futures joining downbeat China inflation data, seems to cap the INR strength. On the same line could be the downbeat Japan growth numbers and downbeat sentiment in India after the Holi holidays.

Elsewhere, an absence surprise in Fed Chair Powell’s Testimony 2.0 and mixed US data seemed to have triggered the US Dollar’s latest pullback. Furthermore, the US 10-year Treasury bond yields seesaw near 3.99% whereas the two-year counterpart pares intraday losses around 5.05% at the latest. It’s worth noting that US yield curve inversion widened to the highest levels since 1981 and propelled the recession fears on Wednesday.

It’s worth observing that the mixed US data seemed to have favored the USD/INR bears even if the early signals for Friday’s employment report are upbeat. That said, the US ADP Employment Change rose to 242K in February versus 200K market forecasts and 119K prior (revised). Further, the US Goods and Services Trade Balance dropped to $-68.3B from the $-67.2B previous reading (revised) and $-68.9B analysts’ estimations. It should be noted that the US JOLTS Job Openings for January improved to 10.824M versus 10.6M expected but eased from 11.234M revised prior.

To sum up, USD/INR is more likely a technical play than a fundamental as the pair’s inability to cross the 100-DMA keeps bears hopeful despite the likely improvement in the US Dollar.

Technical analysis

USD/INR’s failure to cross the 100-DMA hurdle during the previous day’s run-up, around 82.13 by the press time, keeps the bears hopeful of witnessing a slump towards an ascending support line from early November, close to 81.35 at the latest