USD/INR lacks direction amid India’s budget optimism, oil rebound
- USD/INR forms a doji on daily sticks ahead of Fed interest rate decision.
- A test of 71.00 still likely amid Indian budget hopes and easing Coronavirus woes.
- Rebound in oil prices to cap the downside in the spot.
Amid easing worries over the China coronavirus outbreak on the Indian economy and hopes that the government will boost spending to revive growth, the Indian rupee trades close to a four-day high reached against its American rival on Wednesday.
USD/INR trades modestly flat near 71.22, having hit a new multi-day low at 71.18 in the last minutes. The rupee remains underpinned by increased expectations of an expansionary fiscal budget likely to be announced by the Indian government on Saturday.
According to the government sources and economists, India’s Cabinet Office is expected to raise spending on infrastructure and cut some personal tax in its 2020/2021 budget, to spur consumer demand and investment.
The USD/INR bears, however, lack momentum amid a solid rebound staged by oil prices. The black gold benefited from a surprise US crude inventory draw while re-assessment of the China coronavirus’ economic impact aided the recovery in oil. Note that India is heavily dependent on oil imports for its domestic consumption.
From a technical perspective, the spot has formed a Doji on the daily chart, suggesting sellers’ exhaustion. This could be also reflective of the fact that markets refrain from placing any directional bet on the pair ahead of the key Fed interest rate decision due later on Wednesday at 1900 GMT.
In the meantime, the spot will take cues from the US Goods Trade Balance, Pending Home Sales and broader market sentiment.
USD/INR Technical levels to consider