USD/INR Price News: Indian rupee bears defend 77.55 with eyes on Quad Summit, Fed’s Powell

• USD/INR picks up bids to consolidate recent losses inside weekly trading range.
• Sour sentiment, market’s anxiety ahead of the key data/events underpin US dollar demand.
• Leaders from the US, India, Australia and Japan meet at the Quad Summit in Tokyo, China in focus.
• US PMIs, Fed’s Powell will provide clear directions amid inflation, growth fears.

USD/INR remains mildly bid around 77.55, following a downbeat start of the week, as the US dollar cheers the risk-off mood during Tuesday’s Asian session.

The Indian rupee (INR) pair’s latest gains could be linked to the hawkish Fedspeak and the US-China jitters, as well as anxiety ahead of top-tier data/events.

That said, India Prime Minister (PM) Narendra Modi, Japan’s PM Fumio Kishida, the US President Joe Biden and Australia’s newly elected PM Anthony Albanese will meet at Quad Leaders' summit on Tuesday. While the decision-makers have recently started discussing multiple issues ranging from the Ukraine-Russia war to coronavirus, major attention will be given to comments relating to China.

Recently, US Trade Representative (USTR) Katherine Tai poured cold water on the face of expectations that the Sino-American jitters will be eased soon, at least for the trade concerns. The US diplomat said, “We're still working on next actions with China,” while turning down the optimism triggered by US President Joe Biden’s comments suggesting a reversal of the Trump-era tariffs on China.

Elsewhere, San Francisco Federal Reserve Bank President Mary Daly and Kansas City Fed President Esther George sound hawkish in their latest comments and renewed the US dollar buying. “I think that we can weather this storm, get the interest rate up...price stability restored and still leave Americans with jobs a plentiful and with growth expanding as we expect it to," said Fed’s Daly during an interview with Fox News on Monday. On the same line, Fed’s George expects the US central bank to lift its target interest rate to about 2% by August.

It should be observed the major banks’ downgrade of the US and Chinese economic forecasts also keep the risk-aversion on the table and weigh on the EUR/USD prices.

Furthermore, the cautious mood ahead of the preliminary readings of the US S&P Global Manufacturing and Services PMIs for May and the scheduled speech from Fed Chairman Jerome Powell also weigh on the market sentiment and propel the USD/INR prices.

Amid these plays, S&P 500 Futures drop 0.85% intraday to 3,938 whereas the US 10-year Treasury yields reverse the previous day’s rebound from the monthly low, down 1.8 basis points (bps) to 2.84% at the latest.

Moving on, risk catalysts are likely to gain major attention as geopolitical tussles between China and the Quad leaders aren’t hidden, which in turn may add strength to the US dollar’s safe-haven demand.

Also read: US S&P Global May PMI Preview: Recession worries are high, but what of probabilities?

Technical analysis

Bearish RSI divergence joins the repeated failures to stay beyond 77.85 to keep USD/INR sellers hopeful. However, a clear downside break of the weekly rising trend channel, around 77.45 by the press time, becomes necessary for the seller’s entry.