USD/INR Price Analysis: Rupee regains 76.50 even as India’s active covid cases jump to six-week high

• USD/INR fades bounce off 100-SMA inside a bullish chart formation.
• India’s active covid cases rally to the highest since March 25, crude prices refrain from declining.
• Sluggish market sentiment, pre-Fed anxiety also challenge moves ahead of the key data/events.
• US ISM Manufacturing PMI will direct intraday moves but major attention will be given to risk catalysts, Fed and NFP.

USD/INR renews intraday low around 76.48, extending the previous day’s weakness, as bears keep reins amid the initial hour of the Indian trading session on Monday.

The Indian rupee (INR) pair’s latest weakness ignores the resurgent covid woes and mostly firmer oil prices. Also challenging the INR bulls are the US dollar’s safe-haven appeal and the market’s risk for risk-safety due to the Ukraine-Russia crisis, as well as China’s coronavirus-led lockdowns. It should be noted that the greenback’s consolidation ahead of this week’s key data/event seems to have helped the USD/INR sellers of late.

As per the latest official update, India reports the highest active COVID-19 cases since March 25, per Reuters. That said, the daily infections eased to 3,157 versus 3,324 while the daily death toll also dropped from 40 to 26.

Elsewhere, the International Monetary Fund (IMF) also conveyed economic fears for the Asia-Pacific region, including India, while saying, “Economic growth in Asia and the Pacific will slow this year to 4.9%, less than last year’s 6.5% pace, amid the war in Ukraine, a resurgent pandemic, and rising interest rates.” For India, the IMF expects 8.2% growth in 2022 versus 8.9% for 2021.

Looking forward, the US ISM Manufacturing PMI for April, expected at 58.0 versus 57.1 prior, will offer intraday directions while major attention will be given to Wednesday’s Fed meeting and Friday’s US NFP data. Should the Fed disappoint markets, the bears may return to the table.

Technical analysis

USD/INR remains inside a monthly rising channel, recently fading the bounce off 100-SMA.

Given the steady RSI and bearish MACD signals, as well as the pair’s inability to cross the 76.75-80 region, the USD/INR bears remain hopeful.

However, the quote’s successful trading above the key SMAs and the bullish cross of the 100-SMA over the 200-SMA hints at a short-term recovery.

Hence, intraday buyers may aim for the 76.75-80 region while any further upside will be challenged by the stated channel’s resistance line close to the 77.00 threshold.

Alternatively, the 100-SMA and the 200-SMA, respectively around 76.35 and 76.15, will test the USD/INR bears before giving them control.

USD/INR: Four-hour chart

Trend: Short-term upside expected