The recovery of the Indian rupee is capped by 73.30

• The Indian rupee is among the best-performing emerging countries on Monday.
• USD / INR bearish momentum remains, challenging support at 73.30.

The USD/INR it is falling on Tuesday due to the improvement in risk sentiment. Over the past few hours, markets around the world posted losses that supported demand for riskier assets.

The pair is testing the 73.30 support area and a break to the downside would likely clear the way for more losses. The next key support is located at 73.00, a psychological area and also a horizontal support. A daily close below would point to a further strengthening of the Indian rupee.

If the USD / INR fails to break out of 73.30, the US dollar could gain momentum for a rally towards 73.50. The next barrier emerges at 73.90. A daily close above 74.00 would suggest more gains going forward. A deterioration in market sentiment on Wall Street would support another rally to the 74.00 area.

Between RBI, Yields, and Wall Street
The pair moves between global risk flows and expectations about monetary policy in India. Risk appetite should continue to support INR and emerging market currencies.

“Faster growth (GDP in the third quarter of FY21 witnessed slight expansion) and stubborn inflation will prompt the Reserve Bank of India to normalize monetary policy, which has already started in some parts. In order to appease the markets, we believe reliance on various tools to drain liquidity will be more important, such as increasing the reverse repurchase rate and the SLR. The appreciation of the rupee may be another channel and we believe that the RBI will facilitate its intervention as a result, “explained analysts at ANZ Research. They expect the USD / INR to end 2021 at 71.00. “We still believe that a strong appreciation is unlikely, given the legislators’ penchant for self-reliance and a competitive rupee. USD / INR at 70.00 should be the line in the sand. “

4 hour chart

Technical Levels