USD/INR Price News: Indian rupee eyes 76.00 at 18-month low amid Omicron, inflation woes

• USD/INR prints eight-day uptrend, stays firmer around June 2020 levels.
• India’s retail inflation missed expectations in November but analysts stay hopeful of escalated price pressure.
• Omicron fears jump, ADB cuts growth forecasts for developing Asia.
• Indian WPI inflation, risk catalysts eyed ahead of Wednesday’s FOMC.

USD/INR picks up bids 75.87 on early Tuesday morning in Europe, following the run-up to a multi-day high the previous day.

The Indian rupee (INR) pair rises for the eighth consecutive day by the press time as markets fears underpin the US dollar’s safe-haven demand. Adding to the bullish bias were chatters surrounding a likely jump in the Indian inflation figures pushing the Reserve Bank of India (RBI) towards a sooner action after its latest status-quo.

The risk-off mood takes clues from fears of rolling back easy-money policies ahead of the key central bank meetings. On the same line were the woes concerning the COVID-19 variant linked to South Africa, dubbed as Omicron.

Following the UK’s first Omicron-linked death and return of the mask mandate in California, Australia’s largest state, population-wise, New South Wales (NSW) reports the highest daily virus infections tally in more than two months. The virus woes pushed the finance ministers and central bank governors of the Group of Seven (G7) nations to pledge more efforts to combat the pandemic. Additionally, the Asian Development Bank (ADB) cut growth forecasts for developing Asia due to the same reason.

“The ADB trimmed its 2021 growth forecast for India to 9.7% from the 10.0% estimate it made in September, but left a 2022 growth forecast unchanged at 7.5%,” said Reuters.

At home, retail inflation jumped to 4.91% in November versus 5.10% forecast and 4.48% prior. However, analysts from Goldman Sachs, Morgan Stanley and Barclays hint at firming up the price pressures, which in turn will push the RBI towards a rate hike.

On the contrary, progress over the US stimulus and India’s lowest daily covid infections since May 01, per official data, caps USD/INR upside.

Amid these plays, the US 10-year Treasury yields seesaw around 1.42% whereas the S&P 500 Futures rise 0.15% at the latest. Furthermore, shares in Japan, Australia, New Zealand and China trade mixed by the press time.

USD/INR traders will pay attention to the scheduled release of Indian WPI Inflation for November, expected 11.9% versus 12.54%, followed by the US Producer Price Index (PPI) for November for intraday clues. However, virus updates and pre-Fed anxiety will be crucial catalysts to watch for clearer direction.

Technical analysis

An upward sloping trend line from November 2020 joins June 2020 peak around 76.50-52 to challenge USD/INR bulls. However, pullback moves remain elusive until staying beyond 75.60.