USD/INR Price News: Indian Rupee cheers risk-on mood in Asia to renew 11-week high, China, Fed eyed

• USD/INR takes offers to refresh multi-day low, prints three-day losing streak.
• China stimulus, PBoC moves join receding fears of restrictive monetary policies to underpin risk-on mood.
• US Dollar braces for Fed amid pullback in yields but US PMIs were comparatively firmer and hence prod greenback sellers.
• Mid-tier US data, risk catalysts eyed for clear directions

USD/INR stands on slippery grounds as it drops for the third consecutive day to test the lowest levels in nearly three months amid early Tuesday. In doing so, the Indian Rupee (INR) pair cheers the risk-on mood in Asia, as well as the US Dollar’s retreat, while declining to 81.73 by the press time.

Headlines fueling hopes of China stimulus and bank intervention from Beijing seem to underpin the latest optimism in the Asia-Pacific zone. While portraying the mood, stocks in China and Hong Kong rallied by nearly 3.0% on the day whereas the index of MSCI’s Asia-Pacific shares outside Japan also rise 1.50% intraday by the press time.

Apart from the China-inspired firmer sentiment, recently downbeat activity data from the major economies also propel the sentiment and weigh on the USD/INR pair amid concerns that the central banks are near the policy pivot.

That said, the US Dollar Index (DXY) retreats from a two-week high after cheering the comparatively better PMIs the previous day, down 0.12% intraday near 101.25 at the latest. It should be observed that the first readings of the US S&P Global Manufacturing PMI for July improved to 49.0 from 46.3 prior and 46.4 market forecasts while the Services PMI eased to 52.4 versus 54.0 expected and 54.4 previous readings. With this, the Composite PMI edged lower to 52.0 from 53.2 prior and 53.1 market forecasts. That said, Chicago Fed National Activity Index for June slid to -0.32 from -0.28 prior (revised) and 0.03 market forecasts.

Not only the US but downbeat PMIs from the rest of the major economies also allowed Wall Street to close on the positive side the previous day, as well as favored the US Treasury bond yields to refresh multi-day high. That said, the manufacturing activity data from Eurozone and Germany dropped to the lowest levels since 2020 while the PMIs from the UK, Australia and Japan were also suggesting fears of easy economic activities.

Against this backdrop, the S&P500 Futures remain sidelined near 4,580, struggling to extend the previous day’s recovery, whereas the US 10-year and two-year Treasury bond yields retreat from the highest levels in two weeks to 3.86% and 4.84% in that order.

To sum up, the upbeat risk profile propels the Indian Rupee (INR) but the US Dollar’s retreat appears elusive and hence today’s US CB Consumer Confidence for July, expected 112.1 versus 109.70 prior, and Wednesday’s Fed Chair Jerome Powell’s speech should be observed closely for clear directions.

Technical analysis

A clear downside break of the 3.5-month-old rising support line, now immediate resistance around 81.85, directs the USD/INR price towards a horizontal area comprising multiple levels marked since February around 81.50.