Usdinr Turns Higher

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Usdinr Turns Higher

Usd/Inr Turns Higher Ahead Of Fed Meeting

It looks like the Indian Rupee (INR) is on the back foot against the USD as the Fed's meeting is only a few days away. In general, higher interest rates in the USA make the USD a more favorable currency than the Indian Rupee (INR).

Additionally, crude oil prices have also turned lower recently, but even that does not seem to be enough to support the INR. India imports most of its oil from foreign countries & thus lower prices should support the INR. However, it seems that the USD/INR traders are focusing more on the Fed's decision than anything else.

Inr Under Pressure On High Us Bond Yields

According to Morgan Stanley, the RBI is expected to keep the interest rates high as the country's economic growth is pretty robust. In simple words, the RBI has no urgency to lower the rates as the economy is doing pretty well.

It looks like the RBI has adopted a higher-for-long stance when it comes to interest rates. This decision will enable the RBI to keep any upside in USD/INR under the cap. However, the 2 factors which can threaten this is a rebound in the crude oil prices and rising US bond yields.

Up ahead is the ISM Manufacturing PMI, ADP employment change, and the Fed's interest rate due on Wednesday. After these events, all eyes will be on Friday's NFP, which will highlight the labor market conditions during April.

In case of a further rise in the USD/INR, the first target will be 83.50, which is also the highest from the 15th of April. A follow-through of the bullish momentum will send the USD/INR pair towards the 83.72 and then the 84.00 handle.

The other scenario is the INR strength which means a revisit to the 82.23 and 83.00 will be on the cards. However, these scenarios are highly unlikely if we look at past price actions of the USD/INR.

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