The USDINR has recorded a four-day decline as traders anticipate the bi-annual testimony of Fed Chair Powell.

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• USD/INR prints four-day losing streak as markets await Fed Chair Powell’s bi-annual testimony.

The pair currently trades last at 82.1000.

The previous day high was 82.1725 while the previous day low was 81.915. The daily 38.2% Fib levels comes at 82.0741, expected to provide support. Similarly, the daily 61.8% fib level is at 82.0134, expected to provide support.

USD/INR grinds higher around the intraday top surrounding 82.15 as it rises for the fourth consecutive day heading into Wednesday’s European session. In doing so, the Indian Rupee (INR) not only bears the burden of the upbeat US Dollar but also justifies fears emanating from China and upbeat Oil price.

That said, the US Dollar Index (DXY) stays defensive around 102.60 while keeping the four-day uptrend without interest moves toward the north. With this, the greenback’s gauge versus the six major currencies cheers upbeat US data and hawkish Fed talks.

US Housing Starts jumped to the highest level since April 2022 by rising 21.7% MoM in May versus -2.9% (revised from +2.2%) recorded in April and -0.8% market forecasts, which in turn favor the DXY bulls. On the same line, Building Permits were also upbeat for the said month, up 5.2% MoM versus -5.0% expected and -1.4% previous readings (revised from -1.5%).

On the other hand, Fed governor and Vice Chair Nominee Philip Jefferson said, “I remain focused on returning it to our 2% target.” On the same line, Federal Reserve Governor Lisa Cook said “I am committed to promoting sustained economic growth in a context of low and stable inflation,” in her statement to be given before the Senate on Wednesday. Further, Fed Board nominee Adriana Kugler also mentioned, per the prepared statements for Wednesday’s Testimony, that returning inflation to the central bank’s 2% target is key to setting a strong foundation for the US economy.

It should be noted that the geopolitical fears surrounding the US and China weigh on the sentiment in Asia and weigh on the Indian Rupee (INR). China’s Ministry of Foreign Affairs (MoFA) said that the US has distorted its political promise to China. Late on Tuesday, US President Joe Biden termed Chinese President Xi Jinping a dictator and flagged concerns of intense Sino-American tension earlier in the day.

Further, WTI crude oil prints the first daily gains in three around $71.50 and exerts additional downside pressure on the INR, due to India’s reliance on energy imports and the record-high deficit. Additionally, the Reserve Bank of India’s (RBI) latest inaction fails to match the tunes with the Fed’s hawkish halt and hence keeps the USD/INR bulls hopeful.

Meanwhile, China’s efforts to push back the recession woes prod the USD/INR buyers amid a sluggish session. That said, China’s Ministry of Finance (MoF) recently announced its intention to take drastic measures while cutting the purchase tax during 2024-25 and 2026-27. The same joins the market’s concerns that the US data hasn’t been too impressive to allow the bears to take a breather.

Amid these plays, S&P500 Futures pause the week-start retreat from the highest levels in 14 months, mostly inactive near 4,436 by the press time, whereas the US 10-year Treasury bond yields pare Tuesday’s losses around 3.74% at the latest.

Looking ahead, risk catalysts and Fed concerns can keep the USD/INR pair firmer as markets await Fed Chairman Jerome Powell’s bi-annual testimony.

A clear bounce off the seven-month-old rising support line, around 81.90 by the press time, allows USD/INR buyers to aim for a fortnight-long falling trend line resistance line, close to 82.25 at the latest.

Technical Levels: Supports and Resistances

USDINR currently trading at 82.1003 at the time of writing. Pair opened at 81.9924 and is trading with a change of 0.13% % .

The pair is trading below its 20 Daily moving average @ 82.3858, below its 50 Daily moving average @ 82.2045 , below its 100 Daily moving average @ 82.2902 and above its 200 Daily moving average @ 82.0756

The previous day high was 82.1725 while the previous day low was 81.915. The daily 38.2% Fib levels comes at 82.0741, expected to provide support. Similarly, the daily 61.8% fib level is at 82.0134, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 81.8808, 81.7691, 81.6233
• Pivot resistance is noted at 82.1383, 82.2841, 82.3958

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