USD/INR Price News: Indian Rupee grinds near two-month low of 82.85 as Fed talks loom

• USD/INR clings to mild gains around the highest levels in two months, retreats of late.
• Broad US Dollar strength weighs on Indian Rupee despite latest pullback in greenback.
• Upbeat Oil price, cautious mood also prods USD/INR bulls at multi-day peak.
• Fed Chair Powell’s speech, US President Biden’s announcements on debt ceiling extension eyed for clear directions.

USD/INR seesaws around 82.75-80 as it prints minor gains amid early Friday in Europe, after refreshing an eight-week high to 82.85 the previous day. In doing so, the Indian Rupee (INR) pair justifies the market’s cautious mood ahead of top-tier events amid mixed clues at home.

While portraying the mood, S&P500 Futures struggle to refresh the yearly top as it prints mild gains near 4,220 after rising to the highest levels since August 2022 the previous day. On the same line, stocks in the Asia-Pacific region trade mixed whereas the US 10-year and two-year Treasury bond yields hesitate in extending the five-day uptrend at the monthly tops.

Among the key risk-negative catalysts are the fears of the US-China tension and the recent concerns that the US debt ceiling extension may witness heavy barriers. That said, headlines suggesting the US House Freedom Caucus’s capacity to block any agreement to raise the $31.4 trillion debt ceiling prod the US Dollar Index (DXY) bulls around a two-month high.

Also challenging the USD/INR buyers is the US-Taiwan trade deal ahead of planned meetings between China's Commerce Minister Wang Wentao and USTR Tai and US Commerce Secretary Gina Raimondo.

It’s worth noting that the recently firmer prices of the WTI crude oil, up 0.65% intraday near $72.50 by the press time, join the fears of Reserve Bank of India’s (RBI) inaction, versus the hawkish hopes from the Federal Reserve (Fed) to keep the USD/INR buyers hopeful.

The concerns surrounding the RBI’s inaction gained momentum after India reported downbeat inflation data. On the other hand, a slump in the market’s bets on the US Federal Reserve (Fed) rate cut in 2023, as well as an increase in the odds of a 0.25% rate hike in June, joined firmer US data and hawkish Fed talks to propel the DXY.

Moving ahead, Federal Reserve (Fed) Chairman Jerome Powell’s speech and US President Joe Biden’s press conference, likely on late Sunday, about debt ceiling extension will be key to watch for clear directions.

Technical analysis

A seven-month-old descending resistance line, currently around 82.85, appears a tough nut to crack for the USD/INR bulls, especially amid the nearly overbought RSI (14) line.