USD/INR Price News: Inflation, Ukraine concerns weigh on Indian rupee below 76.50

• USD/INR rebounds from weekly low, prints first daily gains in three.
• Fears of inflation in India, abroad joins market’s anxiety over Russia-Ukraine talks to favor bulls.
• Uncertainty over fuel prices battle Indian PM Modi’s optimism, polls suggest further upside pressure on inflation.
• US CPI, Russia-Ukraine talks will be the key catalysts to watch for fresh impulse.

USD/INR picks up bids to renew intraday high around 76.40 as Indian markets open for Thursday. In doing so, the rupee (INR) snaps a two-day rebound while easing from a one-week top.

Doubts over the petrol prices, after a four-month halt to daily fixing, joins fears of higher inflation to trigger the USD/INR pair’s latest rebound. “State-run fuel retailers may resume daily price adjustments of petrol and diesel shortly, after a four-month pause, executives of the oil marketing companies said, amid soaring energy prices worldwide,” said Reuters while quoting Mint.com.

That said, Reuters’ latest poll hints that Indian retail inflation likely slipped marginally in February, thanks to lower food prices, but economists also warned that surging oil prices will push inflation much higher in the coming months.

Elsewhere, India’s Prime Minister (PM) Narendra Modi addressed the plenary session of Post-Budget Webinar and mentioned, “Indian economy is once again picking up momentum after once-in-a-century pandemic and this is reflection of our economic decisions and strong foundation of economy,” said EUCLID Procurement per Reuters.

On a broader front, market sentiment remains dwindled amid cautious mood ahead of the key Ukraine- Russia peace talks in Turkey, as well as the US Consumer Price Index (CPI) for February, likely rising to 7.9% from 7.5% prior.

However, softer oil prices and hopes of a positive outcome, due to Ukraine’s recent retreats, seem to underpin equities in Asia-Pacific markets. As a result, India’s BSE Sensex rises around 3.0% intraday by the press time even as the S&P 500 Futures struggle to match Wall Street gains.

Moving on, risk catalysts are likely to keep the reins and the moves of oil prices will be crucial for USD/INR due to the nation’s reliance on crude imports and record deficit.

Technical analysis

The USD/INR pair’s latest bounce-off 10-day EMA, around 76.13 by the press time, eyes the December 2021 high of 76.60. However, any further upside will be challenged by the 77.00 threshold and the recent top surrounding 77.20. Meanwhile, the mid-February peak of 75.70 will act as an additional downside filter for the pair.