• USD/INR is printing a four-day uptrend to refresh an all-time high.
  • A Reuters poll hints at further difficulties for the Indian economy, RBI, as inflation is expected to stay higher for longer.
  • The US Dollar is encouraging risk aversion amid strong inflation expectations ahead of Wednesday’s CPI.
  • Headlines regarding China, Europe are also weighing on market sentiment.

USD/INR takes the bidding to refresh its all-time high at 79.58 during the four-day uptrend as US Dollar bulls hold the reins amid recession and inflation fears. The pessimistic market forecast for the country’s economic outlook also contributed to the surge in the Indian Rupee (INR) pair during Tuesday’s Asian session.

Indian inflation will hold above the top of the central bank’s tolerance band for at least the rest of 2022, longer than previously thought, making several more U.S. rate hikes all but inevitable. interest in the coming months, according to a Reuters poll.

The survey also forecasts India’s GDP growth of 7.2% in FY2023, 6.5% in FY2024 and 6.5% in FY2025 (vs. 7.5%, 6.5% and 6.5% respective expectations published in the April survey).

On a broader front, a record print of U.S. one-year inflation expectations, according to the New York Fed’s survey of consumer one-year inflation expectations, joins the chatter surrounding the recession to propel USD/INR prices. That said, the New York Fed’s inflation harbinger jumped to 6.8% in June from 6.6% previously.

Hopes of Fed aggression, previously buoyed by the latest US jobs report, are also contributing to market pessimism. According to Friday’s release, nonfarm payrolls (NFP) in the United States increased by 372,000 for June, against the expected 268,000 and the previously revised downwards 384,000, while the unemployment rate remained unchanged. at 3.6%.

In addition, Shanghai’s first case of the Omicron coronavirus BA-5 subvariant has added to the woes of the virus and public outrage after the dragon nation failed to maintain lockdown activities. Additionally, strong inflation data from the Asian major and doubts over Beijing’s GDP target, as well as the ability of the stimulus to renew optimism, also spoil the mood and keep hopeful USD sellers alive. /INR. Note that the probable storage of gas for the euro zone and the anticipated economic slowdown on the old continent are also fueling the Indian rupee pair.

Amid these plays, U.S. equity futures and Asia-Pacific stocks remain under pressure as U.S. Treasury yields continue to flash recession woes as of press time.

Thereafter, risk catalysts could entertain traders ahead of Wednesday’s US Consumer Price Index for June, expected at 8.8% vs. 8.6% previously.

Technical analysis

Although the overbought RSI (14) is testing USD/INR buyers, the quote is poised to breach a fortnight-old resistance line near 79.85 unless it breaks below an ascending trendline as of May 5, close to 78.80 at press time.