USD/INR Price News: Indian Rupee stays firmer around 81.60 as Fed signals policy pivot, RBI intervenes

• USD/INR bears prod three-week-old ascending support line, drops for the second consecutive day.
• Indian Rupee buyers keep the reins amid talks of RBI’s US Dollar buying, Fed’s dovish rate hike.
• Market sentiment remains sluggish as banking crisis debt ceiling expiry woes escalate.
• Second-tier data eyed ahead of Friday’s US NFP.

USD/INR remains on the back foot for the second consecutive day, mildly offered near 81.70 heading into Thursday’s European session. In doing so, the Indian Rupee pair benefits from the Federal Reserve’s (Fed) signals of a halt in the monetary policy tightening. However, the Reserve Bank of India’s (RBI) Open Market Operations (OMO), as well as indirect Dollar moves via Indian companies, seem to challenge the INR pair as it drills short-term key support.

Federal Reserve (Fed) announced a 25 basis points (bps) rate hike on Wednesday and propelled the benchmark rate to the highest since 2007. Following that rate announcements, Fed Chairman Jerome Powell also ruled out banking woes to praise the economic soundness. However, the omission of statements supporting further rate hikes and higher importance to the data dependency drowned the US Dollar despite the key central bank’s hawkish move.

On the other hand, downbeat Oil prices also allowed the USD/INR bears to keep the reins as the WTI benchmark dropped to the lowest levels since December 2021 before recently recovering to $69.00.

Furthermore, PacWest Bancorp teased an asset sale late Wednesday and propelled the market’s banking woes and weighed on the US Dollar, via indirect challenges to further rate hikes. Additionally, the White House statements suggesting debt limit default could cost 8.3 million job losses also weigh on the sentiment and the US Dollar.

On the same line could be the heavy inflow of funds into Indian equities. “Foreigners are buyers of $1.5 billion of Indian equities in the last three sessions,” per Reuters. Also, a 13-year high of India’s S&P Global Services PMI for April exerts downside pressure on the USD/INR price.

It’s worth mentioning that Reuters quote anonymous traders to state that the RBI has been buying dollars via public sector banks to keep the pair narrow range, which in turn should prod the USD/INR bears. On the same line could be the recent rebound in the Oil price. Additionally, Reuters shares comments from anonymous Indian government official to suggest further easing in India bond yields, which in turn prods Indian Rupee buyers. "The Indian government expects the cost of borrowing via treasury bills to fall going forward, a senior government source said on Thursday, after the 10-year benchmark bond yield dipped below 7% for the first time in over a year," per Reuters.

Moving on, USD/INR traders should pay attention to the risk catalysts and second-tier US data ahead of Friday’s key US Nonfarm Payrolls (NFP) for clear directions.

Technical analysis

A three-week-old ascending support line joins the 200-DMA to restrict the short-term USD/INR downside near 81.65-60. That said, recovery moves need validation from the 21-DMA hurdle of around 81.90.