USD/INR Price News: Indian Rupee bounces off fortnight low to 82.00 as US inflation looms

• USD/INR reverses from 13-day high to pare the first weekly gains in three.
• US Dollar snaps two-day rebound amid mixed concerns about debt ceiling expiration, banking woes.
• Cautious optimism, hopes of easing inflation pressure favor Indian Rupee buyers.

USD/INR sellers return to the table, after a three-day absence, as the markets prepare for the US inflation data on early Wednesday. In doing so, the Indian Rupee (INR) pair reverses from the highest level since April 21 but lacks follow-through amid a cautious mood and a light calendar.

Markets slide into consolidation mode ahead of the key data amid hopes that the US policymakers can avoid the likely “catastrophic” default, despite the first failed attempt. Also, an absence of any fresh banking fallouts and recently upbeat earnings season allowed USD/INR bulls to take a breather, via the US Dollar’s retreat.

That said, the US Senate Majority Leader Chuck Schumer conveyed the absence of progress in the key debt-ceiling negotiations during the first round of talks in the White House. Even so, US President Joe Biden called the meeting “productive” and reported that House Speaker Kevin McCarthy said during the meeting that the US would not default on its debt, per Reuters. The news also quotes US House Speaker McCarthy saying that the two sides agreed for their staff to get together this week, and for the principals to meet again on Friday to continue talking.

Alternatively, the global rating giant Moody’s recently said (about the US default fears), “What once seemed unimaginable now seems a real threat.”

On the same line could be the hawkish comments from New York Fed President John Williams who said, per Reuters, "Fed has not said it's done raising rates."

Elsewhere, the recent retreat in the WTI crude oil price from a one-week high, down 0.45% intraday near $73.15 by the press time, also exerts downside pressure on the USD/INR price due to India’s reliance on energy imports.

At home, hopes of witnessing a softer inflation number from India, during its release on Friday, also seem to allow the USD/INR buyers to prepare for the key event, as well as for today’s US Consumer Price Index (CPI) data. India's consumer inflation likely cooled to an 18-month low in April as rises in food and fuel prices moderated, keeping it below the Reserve Bank of India's upper tolerance limit for the second consecutive month, a Reuters poll of economists found.

Against this backdrop, the S&P 500 Futures print mild gains while licking the previous day’s wounds whereas the US 10-year Treasury bond yields print the first daily loss in five around 3.51%. On the other hand, the US Dollar Index (DXY) also retreats to 101.50 after rising in the last two consecutive days.

Moving ahead, anxiety ahead of the key US inflation numbers may restrict immediate USD/INR moves, especially amid a light calendar elsewhere. That said, unimpressive expectations from the US inflation numbers keep the pair buyers hopeful as a surprisingly upbeat outcome can provide a much-needed rebound to the US Dollar.

Technical analysis

Failure to provide a daily closing beyond a two-month-old resistance line and the 100-DMA, respectively near 82.10 and 82.20, directs USD/INR sellers back to the 200-DMA support of around 81.65. However, the 21-DMA level of 81.90 restricts the immediate downside of the Indian Rupee pair.