USD/INR consolidates near 83.20, expects RBI intervention

• USD/INR receives upward support on market caution regarding the Fed’s interest rates trajectory.
• RBI is expected to keep its current interest rates unchanged at 6.50% in October’s meeting.
• Stronger jobs data bolster the US yields; contributing support for the Greenback.

USD/INR hovers around 83.20 during the Asian session on Wednesday. The pair is receiving upward support amid market caution regarding the US Federal Reserve’s (Fed) likelihood to keep interest rates higher for a prolonged period.

However, the Reserve Bank of India (RBI) could step in to curb the upward momentum of the USD/INR pair by selling US Dollars (USD) in the non-deliverable forwards market. Additionally, dollar sales from foreign banks related to custodial flows could offer support to the rupee.

Short positions on the rupee have strengthened and are now at their highest since November 2022, as per a Reuters poll.

US Dollar Index (DXY) surged to an 11-month high in the previous session, propelled by robust US employment data and higher US Treasury yields. The spot hovers around 107.10 at the time of writing.

US JOLTS Job Openings outpaced expectations, contributing to an uptick in US Treasury yields. The 10-year US Bond yield reached its highest level since 2007, hitting 4.85% on Wednesday.

JOLTS report showed that job openings improved to 9.61 million in August from the previous reading of 8.92 million, surpassing market expectations. Furthermore, cautious sentiments surrounding the US Federal Reserve's (Fed) interest rate trajectory are bolstering positive sentiment for the Greenback.

Cleveland Federal Reserve President Loretta Mester indicated a likelihood of favoring an interest rate hike at the next meeting if the current economic conditions persist. Conversely, Atlanta Fed President Raphael Bostic shared a patient perspective on the Fed's policy outlook, stating that there is no rush to raise or reduce rates.

Market participants await the US employment data, with the release of the ADP report on Wednesday and the Nonfarm Payrolls on Friday. On the other side, Traders will likely watch the RBI's interest rate decision on Friday, with expectations that it will maintain the current level of 6.50%.