• USD/INR prints the biggest daily loss on a day, so far, since early June on breaking the key support.
  • India reports the biggest FPI inflow of 2023 in June, up for the fourth consecutive month.
  • Firmer Oil price, mixed sentiment and softer US inflation gauge prod Indian Rupee traders.
  • FOMC Minutes, US NFP will be crucial for clear directions.

USD/INR drops to the lowest levels since early May after breaking the short-term key support, backed by upbeat Indian fundamentals, amid Monday morning in Europe.

That said, an upward-sloping trend line from November 2022 has been restricting the Indian Rupee (INR) pair’s downside of late and hence the latest break of the same triggered the quote’s slump towards the multi-day low.

Adding strength to the USD/INR downside momentum is the news that the Foreign Portfolio Investors (FPIs) have parked the biggest sum in 10 months in India, not to forget marking the fourth consecutive advance. “The foreign portfolio investors (FPIs) pumped in ₹47,148 crore in Indian equities in June, the highest monthly buying of the year,” said The Mint.

While cheering a technical breakdown and the heavy equity flow that propels India’s benchmark equity gauges to an all-time high, the USD/INR pair ignores upbeat prices of WTI crude oil. WTI crude oil rises for the fourth consecutive day to $70.65 by the press time, up 0.34% intraday at the latest. It’s worth observing that India’s heavy reliance on energy imports makes the INR vulnerable to Oil price moves.

Not only the Oil price but the US Dollar’s rebound also fails to inspire the USD/INR buyers. The reason could be linked to Friday’s downbeat performance of the Fed’s favorite inflation numbers, namely the US Personal Consumption Expenditure (PCE) Price Index for May, as well as softer outcomes of the US spending survey released previously. With this, the US Dollar Index (DXY) prints mild gains around 103.00, reversing the previous day’s pullback from a two-week high.

Elsewhere, the US Treasury Secretary Janet Yellen’s China visit during July 06-09 period witnessed mixed responses from the market. While the news appears positive for the sentiment on the front, the details seem less impressive as US Treasury Secretary Yellen is likely to flag concerns about human rights abuses against the Uyghur Muslim minority, China’s recent move to ban sales of Micron Technology memory chips, and moves by China against foreign due diligence and consulting firms, per Reuters.

Having witnessed the initial market reaction to the trend line breakout and upbeat fundamentals, the USD/INR traders should pay attention to the US ISM Manufacturing PMI and other risk catalysts for intraday directions. However, major attention will be given to Fed Minutes and US Nonfarm Payrolls (NFP) report for a clear guide.

Technical analysis

A clear downside break of an eight-month-old rising support line, now immediate resistance near 81.95, directs the USD/INR bears toward the April month’s bottom of around 81.60.