USD/INR rises to 74.50 as US dollar strengthens

• The Indian rupee drops versus greenback amid global concerns.
• Commodities hold onto important daily losses, weighs on EM currencies.

The USD/INR rebounded around the 74.15 area and climbed to 74.54, reaching the highest intraday level since July 21. So far, the pair was unable to hold above 74.50 and pulled back to 24.40. It is rising 0.35%, up for the second day in row.

The sharp reversal in USD/INR weakened the technical outlook for the Indian rupee. The pair is testing an important resistance at 74.50 and a consolidation above could clear the way to more gain, with a possible target at 74.85. On the flip side, 74.15 is again a key support to take into account.

From a fundamental perspective, the main driver in price action is USD strength. The greenback started to rise after Friday’s NFP. Those numbers increased the debate about when the Federal Reserve would taper purchases and raise rates.

On Monday, the dollar received another impulse from risk aversion amid resurgence of coronavirus cases and new restrictions in China. The demand for emerging market currencies was also hit by a sharp slide in commodities.

Technical levels