• USD/INR grinds higher around intraday top, extends India Inflation-led rebound.
• US Dollar benefits from market’s cautious mood ahead of key central bank announcements.
• Fed announced 50 bps rate hike, as expected, but showed readiness to keep higher rates for longer.
• Key central bank announcements, US Retail Sales eyed for fresh impulse.

USD/INR makes rounds to an intraday high near 82.65 during early Thursday, extending the previous day’s recovery moves amid mixed sentiment.

That said, the Indian Rupee (INR) dropped the previous day amid downbeat Indian inflation but the US Dollar weakness probed the USD/INR buyers. However, the recently cautious mood in the market, especially as a slew of central bank announcements are in line, seems to underpin the USD rebound and favor the pair to remain firmer.

India’s WPI Inflation eased to 5.85% in November versus 7.0% expected and 8.3% prior. The same turns down the odds of the Reserve Bank of India’s (RBI) further rate hikes and weighs on the INR. On the same line could be the downbeat concerns surrounding the Indian Current Account Deficit (CAD). “India's current account deficit likely rose to its highest in nearly a decade in the July-September quarter as elevated commodity prices and a weak rupee stretched the trade gap even further, a Reuters poll of economists found,” said Reuters.

It’s worth noting that the US Dollar Index (DXY) consolidates recent losses around 103.90, up 0.30% intraday while bouncing off the six-month low amid cautious markets. The US Dollar’s rebound could also be linked to the reassessment of the Fed verdict, suggesting a 50 bps rate hike and readiness to hold the rate higher for a longer period.

To portray the mood, S&P 500 Futures remain mildly offered but the US 10-year Treasury bond yields probe a two-day downtrend near 3.50%. Further, the US two-year US bond yields also extend recovery from the monthly low while printing the first daily positive in three near 4.25%. It should be noted that India’s benchmark equity index, BSE Sensex, prints mild losses of around 62,390 by the press time.

Looking forward, USD/INR traders should pay attention to the multiple central bank announcements, including the Swiss National Bank (SNB), European Central Bank (ECB) and the Bank of England (BOE), as the same could trigger market volatility and propel the US Dollar. Additionally, the US Retail Sales for November, expected -0.1% MoM versus 1.3% prior, may also direct short-term pair moves.

Technical analysis

A daily closing beyond 82.90 appears necessary for the USD/INR bull’s conviction.