• USD/INR has printed a fresh weekly high at 82.11 amid a recovery in the USD Index.
• The Fed is not expected to pause rate hikes sooner despite a deceleration in inflation and easing labor market conditions.
• The Indian Rupee is failing to show resilience despite the buying spree from FIIs.

The USD/INR pair has printed a fresh weekly high at 82.11 in the opening session. The major has been fueled by a recovery move in the US Dollar Index (DXY) on expectations that one more rate hike by the Federal Reserve (Fed) is in pipeline to arrest sticky United States inflation swiftly.

The USD Index has rebounded after a correction to near 101.65. Also, US Treasury yields have been lifted by a recovery in the USD Index. Investors seem reluctant to invest in US government bonds as the Fed is not expected to pause its policy-tightening spell sooner despite a deceleration in inflationary pressures and easing labor market conditions. The 10-year US Treasury yields have climbed above 3.58%.

Meanwhile, S&P500 futures have extended losses as investors are cautious after poor quarterly earnings show from investment-banking firm Goldman Sachs and pharma-giant Johnson and Johnson (J&J), portraying a decline in the risk appetite of the market participants.

A power-pack action would be shown by the USD Index amid the release of the Fed’s Beige Book, which will provide the current economic prospects of 12 Fed districts. Any sort of improvement in economic activities, labor demand, and other economic indicators will cement the need for further rate hikes by the Fed to keep pressure on persistent inflation.

Meanwhile, Indian Rupee is failing to show resilience despite the buying spree from Foreign Institutional Investors (FIIs). The catalyst that is weighing pressure on the Indian rupee is the healthy demand forecast for oil. The street is confident that the Chinese economy is well on track for economic recovery after the release of upbeat Gross Domestic Product (GDP) and Retail Sales figures.

It is worth noting that India is one of the leading importers of oil in the world and an upward revision of oil demand will increase its prices and will impact the Indian rupee.