USD/INR Price News: Rupee bulls ignore India’s economic, covid woes to attack 73.00

• USD/INR remains depressed for fifth consecutive day near seven-week low.
• Indian economic activities drop for the seventh week, GDP expected to contract for April-June period.
• Covid cases ebb but no signs of overcoming the pandemic as cyclone Tauktae adds to worries.
• US FOMC Meeting Minutes, risk catalysts can offer fresh impulse.

USD/INR marks a full one-week south-run while taking offers around 73.00, near late March lows, amid Wednesday’s initial Indian session trading. In doing so, the Indian rupee (INR) pair cheers US dollar weakness while paying a little heed to the fundamental drawbacks at home.

The US dollar index (DXY) drops for the second consecutive month, teasing February lows of late, amid uncertainty over the US Federal Reserve’s (Fed) next action. Although America is gradually recovering from the pandemic, policymakers cite the need for further easy money, which in turn flashed reflation fears and weighed the greenback. Also on the negative side could better return from equities and bonds, as well as economic optimism reducing the safe-haven demand of the USD.

On the other hand, Jefferies recently came out with the Indian economic analysis while saying, “India’s economic activity levels decline for an eighth consecutive week and have a further downside as states continue with tighter lockdowns despite new Covid-19 cases showing signs of ebbing.” On the same line, Nomura also cites downside risk for the Indian GDP as Reuters said, “Nomura expects India’s gross domestic product to contract 3.8% sequentially in April-June against an initial projection of an expansion of 1.5%. It had recently revised its growth projection to 10.8% for this fiscal year from 12.6% earlier.”

It's worth mentioning that the Indian covid cases have been slowly coming down from above 400K levels to recently near 267,334. However, structural problems in the Indian system and lack of resources, as well as the recent cyclone Tauktae keep testing the bulls.

Cautious sentiment ahead of today’s US FOMC meeting minutes also probes USD/INR bears. That said, S&P 500 Futures drop 0.30% by the press time whereas Indian markets look for fresh impulse.

Technical analysis

Unless crossing the previous week’s top of 73.71, USD/INR bears seem to target the mid-March top surrounding 72.70.