USD/INR Price News: Indian Rupee drops back to 82.60 as clues to confirm Fed peak rates loom

• USD/INR sticks to mild gains while reversing the previous day’s pullback from weekly top.
• US Dollar consolidates the biggest daily loss in six weeks amid mixed concerns about China, Fed.
• Firmer Oil price also puts a floor under USD/INR price.
• Cautious mood ahead of top-tier US, India data allows Rupee bulls to take breather.

USD/INR prints mild gains around 82.60 as it consolidates the biggest daily fall in a week amid early Wednesday’s market consolidation. That said, the Indian Rupee (INR) pair refreshed the weekly top the previous day before a slump in the US Dollar recalled the bears.

It’s worth noting that the disappointing US data and China-linked optimism weighed on the Greenback price before the latest US Dollar rebound amid the market’s mixed feelings about China and cautious mood before the top-tier data from the US and India.

Talking about China, the Dragon Nation recently conveyed its dislike for the US Commerce Secretary Gina Raimondo’s complaints about the hardships for the US firms in China. Previously, chatters about the early rate cuts from the People’s Bank of China (PBoC) and a cut into the mortgage rates, as well as likely improvement in the US-China ties, favored the market’s optimism.

It should be noted that the International Monetary Fund’s (IMF) readiness to be more cautious while allocating the Special Drawing Rights (SDRs) in the future, due to the current environment of higher interest rates and inflation, also seems to renew the US Dollar’s demand.

Talking about the US data, the Conference Board's (CB) Consumer Confidence Index gained major attention as it slumped to 106.10 for August from a downwardly revised 114.00 prior (from 117.0), versus 116.0 market forecasts. That said, the US JOLTS Job Openings slumped to the lowest since March 2021, to 8.827M for July versus 9.465M expected and 9.165M prior (revised from 9.582). Additionally, the US Housing Price Index eased to 0.3% MoM for June from 0.7% prior and 0.2% while the S&P/Case-Shiller Home Price Indices improved to -1.2% YoY from -1.7% previous readings and -1.3% market forecasts.

The US statistics became more detrimental for the Greenback as fears of the Fed’s policy pivot in 2023 rallied on Chairman Jerome Powell’s Jackson Hole speech that highlighted the data dependency for future moves. With this, the CME’s FedWatch Tool signaled a 16% chance of a rate hike versus 20% prior. The same propelled Wall Street benchmarks and weighed on the US Treasury bond yields, as well as the US Dollar, before the latest rebound in the US Dollar Index and stabilization of the yields.

Apart from the US Dollar’s rebound, the firmer Crude Oil price also weighs on the Rupee due to India’s reliance on energy imports. That said, the WTI crude oil prods a one-week high near $81.30 by the press time.

Moving on, the US ADP Employment Change, the final readings of the US second quarter (Q2) Gross Domestic Product (GDP) and the Personal Consumption Expenditure (PCE) will direct intraday moves of the USD/INR pair as markets seek more clues to confirm the dovish bias about the Fed.

Following that, India’s Q2 GDP, US Core PCE Price Index and Nonfarm Payrolls (NFP) will be crucial to determine near-term USD/INR moves.

Technical analysis

A convergence of the 50-DMA and a one-month-old rising support line, close to 82.45 at the latest, appears a tough nut to crack the USD/INR bears.