• USD/INR picks up bids after renewing multi-day low.
• Risk reversals jump the most since October 06.
• Two-month-old support line break favor bears amid descending RSI line.

USD/INR consolidates intraday losses around a one-month low, picking up bids to 74.61 heading into Wednesday’s European session.

In doing so, the Indian rupee (INR) pair justifies the previous day’s downside break of a two-month-old support line, now resistance around 74.80.

However, the options market signal for the pair turns bullish of late. That said, a measure of the spread between call and put prices, known as the Risk Reversal (RR), jumps the most in a month to +0.125 level following a two-day fall.

The aforementioned mismatch between the technical signals and options market clues precedes the US Federal Reserve’s (Fed) key verdict on tapering of bond purchases, likely to be announced today.

Should the Fed propels the US dollar, the latest rebound could bounce back beyond the previous support of around 74.80 to regain the 75.00, comprising July’s top.

On the contrary, a 50-day EMA level of 74.51 holds the key to further USD/INR weakness towards the 75.00 psychological magnet, including 200-day EMA.

USD/INR: Daily chart

Trend: Further weakness expected