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- USD/INR consolidates recent losses around all-time high, sidelined of late.
- India reports lowest covid infections in 22 months, rallying commodities challenge INR.
- Absence of major negatives from Russia-Ukraine front joins EU, UK’s resistance in sanctioning Moscow’s oil to favor market sentiment.
- Fed’s silence, light calendar can keep markets steady but geopolitical headlines will be key for fresh impulse.
USD/INR bulls take a breather around 77.00 during Tuesday’s Asian session, following a run-up to refresh the record top 77.14 the previous day.
The Indian rupee (INR) pair’s latest pullback could be termed as profit-booking amid sluggish markets and an absence of macro. Also challenging the USD/INR bulls is the latest improvement in the market sentiment, as well as improvement in India’s covid conditions.
As per the latest official figures, India reported the lowest daily rise in coronavirus infections since May 2020. Further, the active covid cases also dropped below 50,000 for the first time since May 14, 2020.
It should, however, be noted that India’s ballooning trade deficit probes USD/INR pullback as the oil prices rallied to a 14-year high the previous day. That said, the WTI crude oil prices jumped to the levels last seen during 2008 before closing the day around $120.00, up 1.50% near $121.20 by the press time.
On a broader front, the European Union (EU) and the UK’s rejection of the US plan to ban Russian oil imports seem to have triggered the latest consolidation in the markets. On the same line could be headlines from Reuters suggesting hopes of talks over the human corridor in Ukraine to evacuate civilians.
Though, no major progress in the Russia-Ukraine talks and Moscow’s continues invasion of Kyiv weigh on the market’s sentiment. As per Reuters, “Ukrainian officials said a Russian airstrike hit a bread factory in northern Ukraine on Monday, killing at least 13 civilians, while talks between Kyiv and Moscow made little progress towards easing the conflict.”
Against this backdrop, the US 10-year Treasury yields extend the previous day’s rebound from two-month to 1.8%, up five basis points at the latest, whereas S&P 500 Futures print mild gains at the latest. It should be observed that markets in India print losses amid chatters over increase in petrol prices, as well as Russia-Ukraine fears.
Moving on, geopolitical headlines could keep the driver’s seat and should be observed closely by the USD/INR traders.
Technical analysis
A daily closing below the previous resistance line from April 2021, around 76.95 by the press time, can drag USD/INR prices towards the year 2021 peak of 76.59. Meanwhile, an upside break above the latest high of 77.14 could extend the run-up towards 80.00 threshold.
It’s worth noting that the overbought RSI and shift in market sentiment seems to have triggered the latest pullback and the same is likely to extend should the quote drops below 76.95.