- USD/INR trades with a negative bias for the third successive day on Wednesday.
- A modest USD selling is seen as a key factor acting as a headwind for spot prices.
- The technical setup still supports prospects for the emergence of some dip-buying.
The USD/INR pair struggles to capitalize on the previous day’s late rebound from over a one-week low and trades with a negative bias for the third successive day on Wednesday. This also marks the fifth day of a downtick in the previous six, though lacks bearish conviction. Moreover, spot prices have been showing some resilience below the 83.00 resistance breakpoint, now turned support, warranting some caution before positioning for an extension of the recent pullback from the record higher touched last week.
The US Dollar (USD) eases from its highest level since July 12 in the wake of a modest decline in the US Treasury bond yields and turns out to be a key factor acting as a headwind for the USD/INR pair. Apart from this, a goodish pickup in the US equity futures further holds back traders from placing fresh bullish bets around the safe-haven USD. That said, firming expectations that the Federal Reserve (Fed) will stick to its hawkish stance should limit any meaningful slide for the US bond yields. This, along with concerns about the worsening economic conditions in China, might lend support to the Greenback.
From a technical perspective, the USD/INR pair now seems to have found acceptance below the 23.6% Fibonacci retracement level of the July-August rally. This supports prospects for a further slide towards 38.2% Fibo. level, around the 82.85-82.80 region, en route to the 82.60 area, or the 50% Fibo. level. A convincing break below, however, might prompt some technical selling and pave the way for some meaningful downfall. Meanwhile, oscillators on the daily chart are holding comfortably in the positive territory and support prospects for the emergence of some dip-buying at lower levels.
Bulls, however, might now wait for some follow-through buying beyond the 83.40 area, or the record high before positioning for a further near-term appreciating move towards the 84.00 round-figure mark.