USD/INR Price News: Indian rupee consolidates recent losses near 75.50 on RBI, Inflation chatters

• USD/INR keeps pullback from two-month high, bounces from intraday low of late.
• India’s retail inflation jumped to seven-month high at the latest but RBI tried to placate bears before the release.
• Major analysts, banks expect RBI to start normalizing monetary policy.
• Risk-off mood, upbeat Fedspeak keep buyers hopeful, second-tier US data to decorate calendar.

Although USD/INR takes a U-turn from the intraday bottom, the quote remains down on a daily basis around 75.60 during the initial hour of the Indian trading session on Tuesday.

The quote refreshed a two-month high the previous day but ended up printing a bearish candlestick formation below an upward sloping trend line from early January. The reason could be linked to the broad risk-off mood, as well as mixed concerns over the Reserve Bank of India’s (RBI) next step.

India’s retail inflation jumped to a seven-month high of 6.01% YoY in January versus 5.66% prior. However, comments from RBI Governor Das raised concerns over the Indian central bank's credibility amid the need for tighter monetary policy.

“Warning the markets before the data release, Shaktikanta Das, RBI governor, said the uptick in annual inflation should not create any panic and the central bank remained committed to its inflation mandate,” Reuters said. The news also mentioned, “Forced to choose between soothing bond markets grappling with runaway yields fuelled by the government's expansionary budget or fighting inflation, the central bank has opted for the former, as it continues to prioritize growth.”

It’s worth noting that multiple analysts from Nomura, Bank of American, Barclays, as well as Morgan Stanley, keep expecting the sooner beginning of the RBI’s policy normalization measures.

On the other hand, the market’s anxiety over the Russian invasion of Ukraine and the Fed’s rate hike challenge the USD/INR bears.

That said, the US Producer Price Index (PPI) for January, expected 9.1% YoY versus 9.7% prior, as well as the Empire State Manufacturing Index for February, will direct intraday USD/INR moves. However, major attention will be given to geopolitical headlines and Fedspeak.

Technical analysis

Monday’s pin bar candlestick below an ascending resistance line from January 04, near 75.80 by the press time, keeps USD/INR sellers hopeful.