USD/INR: Mildly bid above 74.00 amid broad US dollar strength

• USD/INR fails to keep the losses.
• The US dollar registers broad strength despite the Fed’s moves.
• Coronavirus turmoil remains present in India, exert credit pressure on Indian Inc.

With the US dollar defying the early-Asia losses, mainly due to the Fed’s surprise, USD/INR register 0.11% gains to 74.05 as Indian markets open for trading on Monday.

The US Federal Reserve (Fed) surprised most market-players by announcing a rate cut, the second in the month, as well as $700 billion worth of Quantitative Easing (QE) to combat coronavirus (COVID-19).

While the news initially dragged the greenback down, traders seem to take clues from the rest of the global central banks which are in line for further rate cuts, QE to buy the USD back.

The market’s risk-tone remains on the back foot as the pandemic has put major central banks and governments to announce strong steps. That said, the US 10-year treasury yields remain weak around 30 basis points down to 0.681% whereas stocks in India remain 4.0% approximately by the press time.

So far there have been 110 positive cases of COVID-19 from India. However, the latest comments from the Union Ministry of Health mentioned that 13 people discharged from the hospital (having signals of the virus earlier) have been tested negative after the treatment.

An Indian credit rating institution, CRISIL, said that credit pressures have intensified on India Inc as the coronavirus spread deepens in India and across the globe. With this, the Reserve Bank of India (RBI) is expected to announce a rate cut in its April month meeting, odds for which were mostly absent earlier.

Investors will now await February month WPI Inflation data for fresh impulse expected 2.65% versus 3.1% prior. However, pandemic headlines and central bank news will undoubtedly offer surprise moves and should be read carefully.

Technical Analysis

Friday’s high near 75.65, followed by 76.00, flashes on the bulls’ radar while sellers are likely to take entry below December 2018 high near 72.90.