USD/INR Price News: Rupee stays depressed around 77.50 on Indian stocks gloom

• USD/INR snaps two-day downtrend, stays inside short-term trading range below 78.00.
• Indian equities remain downbeat tracking global clues and firmer oil prices.
• Reuters poll suggests the first annual decline in Indian stocks in seven years.
• FOMC Minutes, US Durable Goods Orders eyed for fresh impulse.

USD/INR pares the first daily gains in three around 77.55 as Indian markets open for Wednesday’s trading.

The Indian rupee (INR) managed to cheer the US dollar weakness during the last two days but the latest rebound of the greenback joins pessimism surrounding the Indian stocks to weigh on the pair prices.

It’s worth noting that the US Dollar Index (DXY) rises 0.21% intraday while bouncing off a four-week low to regain the 102.00 threshold. The DXY rebound could be linked to the risk-negative headlines from China and South Korea, as well as the market’s preparations for the US Durable Goods Orders for April, expected 0.6% versus 1.1% prior, as well as the Federal Open Market Committee (FOMC) Minutes.

On the other hand, a Reuters poll mentioned that India's equity markets will mark their first annual decline in seven years in 2022 as higher interest rates and weakening growth prospects reduce the chances of a quick rebound from this year's already sharp drop. The justification for the same said, “Soaring inflation in India and around the world, with frayed supply chains made worse by Russia's invasion of Ukraine, has pushed most central banks to begin raising interest rates, triggering hefty outflows from risky assets.” It should be observed that India’s benchmark equity index BSE Sensex drops 7.0% during 2022.

That said, mixed sentiment and USD recovery could keep the USD/INR prices firmer ahead of key US data and Fed Minutes. The upside, however, needs to be backed by firmer US data and the FOMC member’s growing concerns over inflation, which in turn pushes them towards a more than 50 bps rate hike.

Technical analysis

Unless breaking a 50-pip trading range between 77.35 and 77.85, USD/INR remains less interesting. However, the recent bearish RSI divergence hints that the pair buyers are running out of steam and hence any clear downside break of the 77.35 will be welcomed with zeal.