USD/INR Price News: Rupee struggles below 78.00 as Moody’s cut India GDP forecasts

• USD/INR eyes the first weekly loss in four despite the latest inaction.
• Moody’s cut India’s calendar year 2022 GDP forecasts to 8.8%.
• US dollar’s slump to monthly low challenges buyers ahead of the Fed’s preferred inflation gauge.

USD/INR pares daily losses around 77.60, following an uptick towards the weekly top, as India’s GDP cut battles broad US dollar weakness during early Friday.

Moody’s Investors Service cut India’s Calendar Year (CY) 2022 GDP forecasts to 8.8% from 9.1% anticipated in March. The global rating institute mentioned that the rising inflation and interest rates will temper the economic growth momentum.

“Even after the latest downward revision, the GDP forecast by Moody’s remains among the most optimistic. While the RBI has projected that the economy will grow 7.2% in financial year 2022-23 (FY23), Fitch expects the economy to grow 8.5%. To be sure, Moody’s has not yet revised its FY23 GDP forecast for India, which remains at 9.1%,” mentioned the Business Standard news shared by Reuters.

It’s worth noting that the inflation and growth fears also weigh on the US dollar and restrict the USD/INR upside despite INR-negative news. That said, the US Dollar Index (DXY) refreshes the monthly low at the 101.43 level as market participants welcomed the lack of uncertainty over the Fed’s next move with zeal. Also weighing on the greenback could be the recently downbeat US data.

The US preliminary Q1 2022 Annualized GDP eased to -1.5%, below -1.4% prior and -1.3% forecasts, whereas the Pending Home Sales slumped in April, to -3.9% versus -2.0% forecast.

Not only in India and the US, China’s softer Industrial Profits for the January-April period, 3.5% versus 8.5% prior, also restrict the USD/INR downside, due to China’s status as the world’s biggest industrial player and the Asian leader.

Against this backdrop, the US 10-year Treasury yields remain indecisive around 2.75% while the S&P 500 Futures print mild losses around 4,050, down 0.15% intraday at the latest.

Looking forward, the US Dollar Index weakness and mixed catalysts may keep USD/INR sellers hopeful ahead of the US Core Personal Consumption Expenditure (PCE) Price Index for April, expected at 4.9% YoY versus 5.2% prior. However, pessimism surrounding the Indian economy could restrict the USD/INR downside.

Technical analysis

Despite the latest run-up, USD/INR remains inside the 50-pip trading range between 77.85 and 77.35. It’s worth noting, however, that the oscillators portray a gradual loss of upside momentum, which in turn keeps the pair sellers hopeful.