USD/INR Price News: Indian rupee pares recent gains around 82.70 amid holidays, DXY rebound

• USD/INR picks up bids while snapping two-day downtrend.
• DXY rebounds amid mixed sentiment, hawkish Fed bets, ignores softer yields.
• Downbeat oil prices, pre-Fed anxiety challenge pair buyers amid holiday in India.
• Monthly PMIs, US Q3 GDP will be important for fresh impulse, risk catalysts are the key.

USD/INR grinds higher around 82.70 as it prints the first daily gain in three despite Monday’s Diwali holidays in India. The Indian rupee (INR) pair’s latest gains could be linked to the US dollar’s broad recovery amid the market’s cautious mood.

That said, the US Dollar Index (DXY) rises 0.20% intraday to 112.11 by the press time amid chatters surrounding Japan’s meddling in the market to defend the yen, as well as challenges to the risk appetite.

Among the major risk-negative catalysts, fears emanating from Korea, China and Russia are crucial to the DXY’s latest rebound. On the same line could be the latest recovery in the hawkish Fed bets.

The news that both North and South Korea have exchanged warning shots near their disputed western sea boundary, published on Monday, also seemed to have favored the US dollar buyers of late. On the same line could be the fears that China President Xi Jinping won’t hesitate to escalate geopolitical matters with the US when it comes to Taiwan. The reason could be linked to Jinping’s dominating performance at the annual Communist Party Congress after winning the third term in a row. Further, news that China announced covid lockdown in the factory hub Guangzhou and the latest jump in the market’s bets over the Fed’s 75 bps move in November, from 88% to 95%, also seemed to have fuelled the USD/INR prices. Additionally, ABC News quoted Ukrainian General Oleksandr Syrskiy citing fears of Nuclear war.

Amid these plays, S&P 500 Futures struggle for clear directions even as Wall Street posted the biggest weekly gains in four monthly by the end of Friday.

It should be observed that the USD/INR run-up also ignores a fall in the US Treasury yields as the benchmark 10-year coupons extend Friday’s pullback from the 32-year high to 4.15%, down six basis points at the latest.

On the same line, a fall in the WTI crude oil prices and the hopes of the Reserve Bank of India’s (RBI) intervention to defend the INR also could have defended the USD/INR bears but did not.

To sum up, USD/INR remains on the front foot due to the US dollar’s fundamental strength versus the INR. However, the RBI intervention and further declines in oil prices may test the buyers. Also important to watch are the preliminary activity numbers for October and the US Gross Domestic Product for the third quarter (Q3).

Technical analysis

A daily closing below a one-month-old support line, around 82.30 by the press time, becomes necessary for the USD/INR bear to retake control.