• USD/IDR bounces off intraday low during three-day downtrend.
• Indonesia Retail Sales grew 0.7% in December versus 1.3% prior.
• Cautious optimism in Asia, US Dollar retreat keep pair bears hopeful.
• Hawkish Fed concerns, downbeat data can challenge Rupiah buyers.

USD/IDR picks up bids to extend the early-day rebound from intraday low as Indonesia reports downbeat Retail Sales figures on Thursday. Even so, the Indonesia Rupiah (IDR) pair remains weak for the third consecutive day amid broad US Dollar weakness and cautious optimism in the Asia-Pacific region.

Indonesia Retail Sales grew 0.7% YoY in December, compared to 1.3% previous growth. Earlier in the week, Indonesia reported the fourth quarter (Q4) Gross Domestic Product (GDP) data and showed that the economy grew 0.36% QoQ and 5.01% YoY during Q4 versus the 0.33% and 4.84% market forecasts. In doing so, Indonesia's GDP stayed below the 1.81% QoQ and 5.72% YoY previous releases but raced to a nine-year high.

It should be noted that the receding fears of the US-China jitters, due to the balloon shooting, join hopes of People’s Bank of China’s (PBOC) rate cuts and the restart of the China-based companies listing on the US exchanges seem to favor risk appetite in Asia.

Elsewhere, the US Dollar Index (DXY) traces the Treasury bond yields to reverse the previous day’s recovery moves, down 0.11% intraday near 103.35 at the latest. That said, the US 10-year Treasury bond yields reversed from a one-month high to snap a three-day uptrend on Wednesday, pressured around 3.61% by the press time.

The reason for the US Treasury yields’ retreat could be linked to the easing fears of the US recession, backed by comments from US President Joe Biden and Treasury Secretary Janet Yellen.

Alternatively, comments portraying inflation fears and supporting the higher rates at the Federal Reserve (Fed) from the Fed officials, as well as the US diplomats, challenge the USD/IDR bears. Fed Governor Christopher Waller teased a long fight with a 2.0% inflation target by citing expectations of tighter monetary policy for longer than expected. New York Federal Reserve President John Williams was almost on the same line while saying that the labor market is still very strong and noted that they have more work to do on rates, adding data will determine the path of rate hikes. Fed Governor Lisa Cook said that the central bank remains focused on restoring price stability, as inflation is still running too high. She added that they would need a restrictive monetary policy for some time.

That said, US Treasury Secretary Janet Yellen mentioned, “While inflation remained elevated, there were encouraging signs that supply-demand mismatches were easing in many sectors of the economy.” Elsewhere, US President Joe Biden said during a PBS interview that there will be no US recession in 2023 or 2024.

Moving on, risk catalysts could entertain USD/IDR traders amid a light calendar with only US Weekly Initial Jobless Claims will be eyed for fresh impulse.

Technical analysis

USD/IDR remains above the 21-DMA support of $15,065 amid bullish MACD signals and steady RSI, which in turn push back bearish bias unless the quote breaks the immediate DMA support.