USD/INR Price News: Indian rupee stays defensive above 74.00 on coronavirus woes

• USD/INR prints mild gains even as 21-DMA tests upside around intraday high.
• Economic fears due to Delta covid variant underpin US dollar’s safe-haven demand.
• Geopolitics, oil prices also challenge the Asian currency amid a light calendar.

USD/INR steps back from 21-DMA hurdle near intraday high to 74.25, up 0.06% on a day, ahead of Monday’s European session. That said, the Indian rupee (INR) pair tracks the broad US dollar consolidation moves amid the covid fears by the press time.

India reports 32,937 daily new Covid cases and 417 death tolls, per the latest government figures. Following the news, the Times of India said, “The country recorded its lowest tally of weekly Covid-19 cases in five months since mid-March, with less than 2.6 lakh infections reported on August 9-15, a drop of 6.7% from the previous week.

On the other hand, the National Institutes of Health’s (NIH) Director Dr. Francis Collins appeared on Fox News and cited fears of witnessing 200,000 cases per day readings of the US infections. CNN also mentioned, “The country last averaged over 200,000 cases per day in January, before the Covid-19 vaccines were widely available. The rate of new hospitalizations among people in their 30s increased by nearly 300% over the past month, according to an analysis of data from the US Centers for Disease Control and Prevention (CDC).”

Other than the covid fears that back the US dollar’s safe-haven demand, geopolitical tension concerning the Taliban–Afghanistan fight and Sino-American tussles, as well as US-Iran jitters, add to the market’s risk-off mood.

It’s worth noting that the US Dollar Index (DXY) declining the most since late June on Friday after the US Michigan Consumer Sentiment data dropped to the lowest since 2011. The latest recovery in the DXY could be traced to the comments from Minneapolis Fed President Neel Kashkari who said, per Reuters, “He wants to see a ‘few more’ strong labor market reports before tapering bond purchases.”

Furthermore, chatters that the recent oil price increase resulted in around 15% drop in state retail buying during July, per Reuters’ data, also weigh on the INR prices.

While portraying the market’s mood the US 10-year Treasury yields drop 3.4 basis points (bps) to 1.263% after declining the most since July 06 the previous day. On the same line were downbeat stock futures.

Looking forward, a light calendar keeps USD/INR moves at the mercy of the risk catalysts.

Technical analysis

Although the 74.00 threshold, comprising lows marked in late June and so far in August, challenge USD/INR bears, 21-DMA and a monthly falling trend line, respectively around 74.27 and 74.43, will be important resistances to watch during the quote’s further recovery.