USD/INR Price News: Indian rupee drops back to 76.40 on firmer oil, mixed mood ahead of Fed

• USD/INR snaps two-day downtrend to rebound from weekly low.
• Oil prices recover from fortnight low on USD retreat, risk-on mood in Asia-Pacific.
• Ukraine-Russia tussles, pre-Fed anxiety weigh on yields, US stock futures.
• Fed’s 0.25% rate-hike is priced in, focus on Powell’s speech and economic projections.

USD/INR extends bounce off weekly bottom, up 0.11% intraday around 76.35-40 during the mid-Asian session on Wednesday. In doing so, the Indian rupee (INR) pair rises for the first time in three while tracking prices of oil.

That said, WTI crude oil prices snap a two-day downtrend while consolidating recent losses around a two-week low, up 2.0% near $95.75 at the latest. Energy bulls seem to have cheered a retreat in China’s daily covid infections and the US dollar pullback to print the latest gains.

That said, stocks in China and Hong Kong lead Asia-Pacific bulls as Beijing reports an easing in the daily covid numbers. “China reports 1,952 new coronavirus cases on March 15 versus 3,602 a day earlier,” said Reuters.

Considering India’s high reliance on oil imports and ballooning trade deficit, an uptick in oil prices weighs on INR and vice versa. It should be noted that the latest outflow of foreign funds also favors the USD/INR buyers. Furthermore, an uptick in India’s daily rise in coronavirus infections to 2,876 from 2,568 also propels the Indian rupee pair.

Elsewhere, mixed comments from Presidents of Russia and Ukraine over the progress of peace talks and the likelihood of any positive results seem to challenge US stock futures of late. Also portraying the market’s anxiety is the easy performance of the US Treasury yields.

Amid these plays, S&P 500 Futures drop 0.18% to 4,257 whereas the US 10-year Treasury yields snap seven-day uptrend around the highest levels since June 2019, down 1.8 basis points (bps) to 2.145% at the latest.

It’s worth noting that, US Producer Price Index (PPI) matched YoY expectations of 10% growth whereas NY Empire State Manufacturing Index printed the biggest downside since May 2020.

Moving on, the US Retail Sales for February, expected to ease to 0.4% from 3.8% prior, will join risk catalysts and oil moves to direct USD/INR traders ahead of the Fed.

Read: Fed Interest Rate Decision Preview: Is history a guide?

Technical analysis

Despite the latest recovery, 10-DMA and one-week-old descending trend line, respectively around 76.50 and 76.58, challenge USD/INR buyers before giving them control.