• USD/INR picks up bids to refresh multi-day top during three-day uptrend.
• Strong US data, fears surrounding RBI’s rate hike favor buyers.
• Sluggish oil prices, pre-Fed blackout test upside momentum.

USD/INR traders prepare for Wednesday’s Reserve Bank of India (RBI) rate hike as the quote jumps to the one-month high near 82.32 during early Tuesday. In doing so, the Indian Rupee (INR) pair takes clues from the firmer US data, as well as downbeat economic concerns at home.

That said, the RBI is expected to announce a 35 basis point of rate hike, to 6.25%, during Wednesday’s monetary policy meeting. However, Reuters said, “With India's annual inflation remaining sticky, the Reserve Bank of India is likely to raise its key repo rate by another 50 basis points to 6.4% on Wednesday, to decisively demonstrate its inflation-fighting credibility.”

Elsewhere, US Dollar remains on the front foot amid doubts over the Fed’s dovish hike in December, mainly due to the firmer US data.

On Monday, US ISM Services PMI rose to 56.5 in November versus 53.1 market forecast and 54.4 previous readings whereas the Factory Orders also registered 1.0% growth compared to 0.7% expected and 0.3% prior. Further, S&P Global Composite PMI improved to 46.4 versus 46.3 initial estimations while the Services counterpart rose to 46.2 compared to 46.1 flash forecasts. On Friday, the US Nonfarm Payrolls (NFP) surprised markets by rising to 263K versus 200K expected and an upwardly revised prior of 284K while the Unemployment Rate matched market forecasts and prior readings of 3.7% for November. Following the upbeat data, Chicago Fed President Charles Evans said, "We are probably going to have a slightly higher peak to Fed policy rate even as we slow pace of rate hikes.”

Additionally, fears surrounding the Indian economic growth, after multiple research houses cut the nation’s Gross Domestic Product (GDP) forecasts, also favor the USD/INR bulls.

It should be noted that softer oil prices and hawkish hopes from the RBI seem to challenge the pair’s further upside.

Moving on, an absence of major data/events and the pre-RBI anxiety could challenge the USD/INR pair buyers.

Technical analysis

A daily closing beyond the 50-DMA hurdle, now support near 81.90 favors USD/INR bulls to aim for the seven-week-old ascending resistance line near 82.70.

USD/INR: Daily chart

Trend: Further upside expected