The USD/INR pair has reversed Friday’s decline from late-April highs.
Even as the death toll in India declines, market mood dwindles amid covid troubles.
The INR is under pressure due to fears of a third wave and a predicted worsening of the current account deficit.
The US dollar’s depreciation may limit the pair’s movement, although bullish momentum appears to be unaffected.
During Monday’s first Indian trading session, the USD/INR remains modestly bid at 74.52. Despite encouraging coronavirus (COVID-19) data from the Asian nation, the Indian rupee (INR) pair confronts the previous day’s fall from a multi-day high.
The official covid data for India, obtained from the Health Ministry early Monday, indicated a 39,796 daily increase in coronavirus infections, bringing the total to 30.59 million. The bulletin also cites 723 covid-related deaths the day before, the lowest number since April 2008, bringing the overall number of fatalities to 402,278.
Comments from Barclays and Nomura predicting an increase in the current account deficit could also be fuelling the quotation (CAD). According to Nomura, the CAD will grow from 0.9 percent of GDP in FY 2021 to 1.5 percent of GDP in FY 2022. Barclays is aiming for a 1.1 percent CAD figure, which appears to be a tad bullish on Indian economics.
Despite Friday’s mixed US jobs figures, a negative attitude and uncertainty over the Fed’s next moves keep the US dollar bought versus key currencies. However, S&P 500 futures are down 0.15 percent, while markets in Asia-Pacific are down somewhat as of press time.
Moving on, an extended holiday in the United States and a light schedule elsewhere may hold the USD/INR near the mid-72.00s. Any unexpected benefits from India, on the other hand, should not be overlooked.
Despite the fact that the mid-April lows test USD/INR bulls around 74.50-55, even short-term sellers are less likely to risk entry until the price stays above the 10-DMA level of 74.32. Overall, the USD/INR is forming a bullish rounding bottom chart pattern on the daily chart, implying additional upside towards the yearly top near 75.65./n
